Indices: Australian ASX 200
The ASX200 started the week on a firm footing, closing up +0.4%, back within a few points of the psychological 8700 area. The catalyst for the solid day was news that the EU and the US had reached a trade agreement, and President Trump was looking to extend his tariff truce with China – the US S&P 500 futures buoyed sentiment, opening ~0.5% higher on the tariff news.
The ASX 200 keeps teasing us with a significant breakout on the upside before gains are tempered by macro &/or geopolitical news.
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The ASX200 struggled to close up +0.1% on Tuesday, with over 40% of the main board closing lower, and notable weakness in the influential banking sector. On Monday, we discussed our view that BHP would outperform CBA by at least 10%, and within 24 hours, more than half of our forecast has already played out, although we note that this was a minimum target.
The ASX200 closed down more than 1% on Monday, enduring its worst drop in three months. The last two trading days have seen similar see-saw action to a pair of days in early April, hopefully it’s not a precursor of the volatility ahead! Monday’s losses were the ASX200’s most severe since a 1.8% drop on April 9, while Friday’s 1.4% gain was the index’s best since a 2.3% rally on April 8th.
The ASX200 punched above 8700 for the first time on Friday and ended up getting fairly close to 8800, the bottom end of our target range into Christmas. As we’ve said before, if the banks, large miners and CSL can advance as one for the first time in 2 years, our 8800-9000 target area for the local index may prove too conservative.
The ASX 200 closed up +0.9% on Thursday, posting both a fresh intraday and closing high. The catalyst being a surprisingly weak June jobs report, which increased the case for three rate cuts before Christmas – two were already being fully factored in. Australian unemployment unexpectedly climbed to a four-year high as hiring almost ground to a halt, sending the $A down by more than 0.5% in rapid fashion.
The ASX200 took a 0.8% hit on Wednesday, its worst session since early May, with over 65% of the main board retreating. Rising long-term bond yields and ongoing uncertainty around tariffs proved too much for a market striving to post new highs.
The ASX200 surged +0.7% on Tuesday following broad-based gains, which saw 70% of the mainboard close higher. The index posted a fresh record closing high for the second time in a fortnight, ignoring plenty of negative news along the way.
