The ASX 200 finished a choppy week down just -0.3%, with the US-Iran conflict and a strong employment report pushing up bond yields, weighing on local risk assets. A Wall Street-led technology sell-off, driven by renewed concerns over the returns on AI capital expenditure, spilled over to the ASX, sending the local technology sector down -6.6% for the week. Healthcare also came under pressure, falling -5.7%, while strength in energy (+5.9%) and materials (+1.7%) helped limit the broader market’s losses.
Last week’s winners and losers reflected the market’s rotation, with energy stocks dominating the gainers while software names featured prominently among the week’s biggest losers:
Winners: Generation Development Group (ASX: GDG) +22%, Karoon Energy (ASX: KAR) +19%, South32 (ASX: S32) +15%, Paladin Energy (ASX: PDN) +15%, Austal (ASX: ASB) +13%, Yancoal (ASX: YAL) +13%, Deep Yellow (ASX: DYL) +9%, and Evolution Mining (ASX: EVN) +7%.
Losers: Zip Co (ASX: ZIP) -15%, Pro Medicus (ASX: PME) -15%, WiseTech Global (ASX: WTC) -14%, Centuria Capital (ASX: CNI) -14%, Helia Group (ASX: HLI) -12%, Xero Ltd (ASX: XRO -12%, Lovisa (ASX: LOV) -12%, Pinnacle Invest (ASX: PNI) -11%, and Liontown (ASX: LTR) -11%.
Weekly snapshot: The standouts of the ASX last week were a strong Australian employment report, which lifted fears of another rate hike before Christmas and ongoing global inflation fears courtesy of the strong oil price:
- It was a choppy first half to the week as sectors jockeyed for position before the miners started to regain their mojo, helped by a strong update from South32.
- On Thursday the market was up over 100-points before a strong employment report pushed up rate hike fears, resulting in over 80% of the gains being lost.
- The market ended the week on the back foot as bond yields soared on inflation fears – the local 10s trading above 5%, back towards their 2026 highs as oil continued to toy with the US$100 level.
Next week we will receive the pivotal Australian Inflation data (CPI) just when rising oil prices are pressuring inflation across the globe – a hotter-than-expected CPI will likely cement another hike this year. On the earnings front, we will hear from RIO locally while big tech faces the music overseas, including Microsoft, Meta, Amazon, and Apple, and SK Hynix.
On the economic front, the Fed is expected to hold rates steady on Wednesday, and on Thursday we will receive the central bank’s preferred inflation read, the PCE print, making it a big week both home and abroad on the inflation front. Unfortunately, developments in the Middle East will also continue to influence stocks.
Overseas markets ended the week mixed on Friday, with tech stocks and uncertainty around Iran continuing to weigh on indices. In Europe, the UK FTSE advanced 0.9%, while the German DAX outperformed, closing up 1.4%. In the US, the tech-heavy NASDAQ fell 1.2%, while the Dow Jones managed to eke out a 0.5% gain.
- The SPI Futures are calling the ASX200 to open up +0.6% on Monday, helped by a ~$1 bounce by BHP in US trade.
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