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The ASX200 had plenty of reasons to fall on Monday, but again, come 4 p.m., the bears were left disappointed: Trump is throwing around tariffs again like confetti, the Dow dropped over 400 points, and the almost guaranteed RBA rate cut failed to materialise. The local market may have only closed marginally higher, but it was an impressive performance considering the respective headwinds with Michele Bullock leaving many analysts and everyday Australians surprised and disappointed at 2.30 pm – at MM, we also got it wrong, believing a 0.25% cut was likely. The RBA Chair decided that prudence was the better form of valour, looking for further clarity on inflation before adding to the two cuts we’ve already seen in 2025, but we found her rhetoric reassuring:
- “The difference in opinion among the board wasn’t so much about the direction but about the timing,” Bullock said. “We don’t want to end up having to fight inflation again. We want to make sure we’ve nailed it.” – Michele Bullock.
- Credit markets are still pricing in two 0.25% cuts before Christmas, with the third a coin toss; in other words, it is still a case of when, not if, the Cash Rate falls from 3.85% to 3.1%.
Tuesday saw the “Certainty Trade” return to the winners’ enclosure as investors adopted a more risk-off stance. CBA +0.8%, HUB24 (HUB) +1.8%, and Technology One (TNE) +1.1% caught our eye, along with strength in copper and gold names. The rate-sensitive sectors experienced a little profit-taking with the utilities and real estate names slipping. Still, as has been the case of late, rotation was the name of the game instead of noticeable buying or selling – no real surprise with the index in its 6th week of consolidation in the 8500-8600 area.
Overseas markets were mixed overnight, as Trump vowed no tariff extensions and planned a 50% duty on copper imports but was prepared to wait a year on drug tariffs. European bourses fared the best with the EURO STOXX 50 and UK FTSE closing up more than 0.5%. The US had a mixed session with the Russell 2000 small-cap index advancing +0.7% while the S&P 500 index slipped 0.1%.
- The ASX200 is set to open slightly lower this morning, with volatility likely in the resources sector after copper surged ~9% overnight, while gold retreated over $US30.
