- Markets @ Midday: Listen here at lunchtime or find all Market Matters Podcasts on Spotify.
The ASX was looking for a floor today, and found something resembling one through midday. After four straight days of selling, the market opened under heavy pressure again, before buyers emerged through the afternoon to claw back some of the damage. The ASX 200 ultimately closed down 3% lower for the week and more than 4% lower for September. Importantly, today’s late recovery means we did not finish on the lows, but the broader trend remains firmly to the downside.
The catalyst for the move remains the same – surging oil prices back to levels not seen since the peak of the US-Iran conflict, taking bond yields higher alongside. Resources stocks, and more specifically anything with copper exposure got hit. After reaching record highs only days ago, copper fell almost 5% overnight, following reports that the White House has yet to decide on refined metal tariffs because of concerns around the impact on US manufacturing costs. That prompted a brutal reversal across the mining complex. Technology wasn’t much better off, with Insurance the lone bright spot across the bourse. Focus shifts to the U.S CPI print tonight, with next week’s FOMC rate decision to hold or hike hanging in the balance.
- ASX 200: -78.16pts (-0.89%) to 8,741.20
- AUD/USD: 0.7175, flat
- Best sectors: Financials +1.08%, Industrials +0.24%, Utilities +0.24%
- Worst sectors: Materials -3.63%, IT -2.06%, Healthcare -1.24%
- Materials -3.63% was the clear drag on the market with the sector falling to a six-week low. BHP (ASX: BHP) -4.05% to $60.87, Rio Tinto (ASX: RIO) -3.54% to $168.30 while Sandfire (ASX: SFR) -5.38% to $21.26, Capricorn Metals (ASX: CMM) -4.59% to $14.96 and Evolution Mining (ASX: EVN) -2.44% to $14.00 fell around 4–6%. Copper’s reversal was the immediate trigger, but the breadth of the selling suggests investors are also taking profits after a very strong run. BHP held in the Active Growth and Income Portfolios; Evolution Mining & Sandfire held in the Active Growth Portfolio.
- Financials interestingly began to show some relative strength as the session progressed, with NAB (ASX: NAB) +2.65% to $38.72, ANZ (ASX: ANZ) +1.69% to $37.27 and Westpac (ASX: WBC) +1.09% to $34.22, while CBA (ASX: CBA) +0.65% to $154.19 was broadly flat – there was a notable rotation out of the Materials stocks and into the Banks as the ‘certainty trade’ rears its head. ANZ held in the Active Growth and Income Portfolios. Westpac held in the Active Income Portfolio.
- Technology remained under pressure, with the Technology index falling for the ninth time in the past ten sessions. Xero (ASX: XRO) -2.53% to $67.05, WiseTech (ASX: WTC) -3.77% to $32.69 and Pro Medicus (ASX: PME) -1.51% to $164.35 fell, taking their weekly falls to roughly 18%, 13% and 7% respectively. This remains one of the clearest casualties of the bond-yield repricing. WiseTech, Pro Medicus & Xero held in the Active Growth Portfolio.
- Insurance was a pocket of genuine strength, with IAG (ASX: IAG) +4.23% to $8.14, QBE (ASX: QBE) +2.86% to $22.68, AUB Group (ASX: AUB) +3.33% to $27.90 and Suncorp (ASX: SUN) +3.65% to $19.61. Higher yields can be supportive for insurers’ investment income, while the sector is also less exposed to the valuation compression hitting high-multiple growth stocks. SUN held in the Active Income portfolio.
- Lithium stocks were hit by a fresh problem from China, where lithium futures plunged as much as 10% after Beijing suspended approvals for new battery projects pending a year-end capacity review. Chinese lithium was down more than 7% around midday, sending Liontown (ASX: LTR) -8.55% to $1.07 and PLS (ASX: PLS) -7.38% to $4.52 sharply lower. Liontown held in the Emerging Companies Portfolio,
- GQG Partners (ASX: GQG) -9.50% to $1.10 was one of the day’s biggest individual casualties after another disappointing FUM update. August FUM fell 4.6% to US$149.2bn, with US$4.3bn of net outflows and a further US$2.9bn hit from investment performance. Held in the Active Growth and Income portfolios, we’re keeping a close eye on this one, more likely to cut than average down at this point.
- Stockland (ASX: SGP) -3.08% to $4.09 also attracted attention after CEO Tarun Gupta sold almost $3.8m of shares to meet tax liabilities. The sale itself was disclosed as being for tax purposes, but the timing caught the market’s attention.
- Ingenia Communities (ASX: INA) +3.12% to $3.97 remains one of the market’s rare bright spots, up more than 3% today and around 8% for the week after rejecting Warburg Pincus’ $4.75 per share takeover offer earlier this week.
- Gold: $4,351.86 / +0.78%
- Brent crude: $106.12 / -1.40%
- Iron Ore: $96.65 / -1.57%
- S&P 500 E-mini futures: +27.25pts / +0.36%
- Dow E-mini futures: +206.00pts / +0.40%
- FTSE futures: +20.00pts / +0.19%
