The ASX 200 edged +0.37% higher last week courtesy of a strong close on Friday afternoon and another strong performance from the Materials sector (+2.5%). Earnings season remained broadly constructive, with estimated profit growth running at ~11%, although the improvement remains heavily concentrated in resources and energy, stripping those sectors out reduces growth to around ~5%. Financials have now fallen for three consecutive weeks amid housing and mortgage concerns, while Consumer Discretionary also struggled as higher rates and slowing housing activity weighed on earnings & sentiment following this week’s higher than expected CPI.
As we would expect this time of year, last week’s winners & losers’ enclosures were again dominated by FY26 reports, while the winners also enjoyed some nice seasoning from the uranium names.
Winners: Data#3 (ASX: DTL) +19%, Ansell (ASX: ANN) +18%, Silex Systems (ASX: SLX) +17%, Ramsay Health Care (ASX: RHC) +15%, Lovisa (ASX: LOV) +14%, Deep Yellow (ASX: DYL) +13%, Electro Optic Systems (ASX: EOS) +13%, and Paladin Energy (ASX: PDN) +13%.
Losers: PEXA Group (ASX: PXA) -18%, Generation Develop. (ASX: GDG) -16%, Aussie Broadband (ASX: ABB) -14%, Magellan (ASX: MFG) -14%, Ingenia Comm. (ASX: INA) -13%, Centuria Capital (ASX: CNI) -13%, Monadelphous (ASX: MND) -10%, and IRESS (ASX: IRE) -9%.
Weekly snapshot: Last week the ASX was dominated by the CPI on Wednesday which weighed on a market which felt like it wanted to go up:
- The ASX 200 started the week off on the front foot as the miners lifted the index above 9100 with BHP hitting a fresh all-time high.
- On Tuesday the RBA minutes highlighted that monetary policy was restrictive “for now”, which helped the ASX 200 add to Mondays gains on broad-based buying.
- The hot CPI (inflation print) sharply reversed early gains on Wednesday after the index broke above 9200 in early trade.
- The local market fully digested the previous days inflation implications on Thursday sending the index sharply lower on broad based selling.
- A strong result from NVIDIA saw the tech sector return to the fore on Friday with the sector advancing +2.3% helping the index finish up for the week.
- In the final hours of US trade on Friday, Fed Chair Warsh doubled down on his vow to finally tame inflation from Jackson Hole sending US rate sensitive stocks tumbling into the close.
With reporting season winding down, attention is shifting firmly back to interest rates and the economy. July’s hotter-than-expected inflation reading triggered a sharp midweek sell-off and increased expectations for another RBA hike, making next week’s GDP data particularly important. A strong GDP or employment print could bring a move forward, although November remains the more likely window, following the September-quarter CPI release in late October.
Overseas markets ended the week on the back foot as traders increased bets the Fed would hike rates into Christmas. In Europe, markets closed up missing the hawkish comments from Warsh, the EURO STOXX 50 and French CAC both finished up +1%. In the US, the NASDAQ retreated by -0.7% while the rate sensitive Russell 2000 small-cap index fared worse closing down 1.4%.
- The SPI Futures are calling the ASX200 to open down -0.4% on Monday following the weak close on Wall Street courtesy of Fed Chair Warsh.
