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First Up

UPDATED 30/07/2026 09:40

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The ASX 200 surged through 9000 yesterday, closing up +1% at a fresh 4-month high, supported by a soft inflation read (CPI). Gains were fairly broad-based for a triple-digit day with ~70% of the main board advancing, led by the rate-sensitive stocks. As we’ve alluded to in the last few morning reports, the ASX has been getting its mojo back of late, and the soft CPI hasn’t hurt the backdrop for local stocks. Even the Australian Financial Review quoted our comments along these lines overnight:

“With the miners already well owned by overseas investors, this would explain why the buyers are spreading their wings,” said James Gerrish, lead portfolio manager of Market Partners in his Market Matters newsletter. “Whatever the reason, as the market internals improve into next month’s reporting season, we wouldn’t be short for quids!” – Source: Australian Financial Review and MM, “The ASX is regaining its “Mojo” here.

Moving back to yesterday’s inflation data, which we believe cemented a strong contrarian view we’ve held over recent months: Headline inflation slowed to 3.8% in June, below the 4% expected, while trimmed mean inflation held at 3.6%, 0.1% better than tipped.

The market is still pricing in a risk of a rate hike later in the year, but it’s now a 50/50 call, and we think the next move will be down, opening the door for a further rally in the market, particularly the rate-sensitive areas.

It’s been a rocky July, but with just two trading days remaining, the historically strongest month of the year is suddenly again on track to deliver: over the last decade, July has produced an average gain of +2.7%; so far it’s up +3% in 2026. For reference, August is usually positive, albeit with greater volatility, as would be expected during reporting season, before we enter the consistently weakest month of the year, September.

Overseas markets were largely weak overnight after Fed Chair Warsh delivered hawkish commentary, not helped by crude oil surging ~8% after Iran attacked a US base in Jordan. In Europe, the EURO STOXX 50 fell 0.7% while the UK FTSE bucked the trend, closing +0.3% higher. In the US, the Dow Jones (-2.2%) and tech-based NASDAQ (-2.1%) led the major indices lower.