After a strong start to the week, which saw the ASX200 rally back towards the 9,000 level, the local market reversed sharply on Thursday and Friday, trimming gains to finish the week up just +0.3%. The damage was done by the combination of hawkish commentary from the Fed’s new Chair, Kevin Warsh, and a more than 5% plunge by heavyweight BHP Group (ASX: BHP) on Friday after its Canadian Potash Project saw costs blow out by US$2.3bn.
Winners and losers were drawn from an eclectic mix of sectors last week, including several underperformers playing catch-up and stocks that either benefitted or suffered from the de-escalation of the US-Iran conflict:
Winners: Catalyst Metals (ASX: CYL) +25%, Web Travel Group (ASX: WEB) +23%, IDP Education (ASX: IEL) +20%, Vault Minerals (ASX: VAU) +20%, Regis Resources (ASX: RRL) +19%, Cochlear (ASX: COH) +14%, Alkane Resources (ASX: ALK) +13%, and Silex (ASX: SLX) +12%.
Losers: Karoon Energy (ASX: KAR) -29%, IperionX (ASX: IPX) -15%, Alcoa Corp (ASX: AAI) -14%, Beach Energy (ASX: BPT) -10%, PLS Group (ASX: PLS) -10%, Santos (ASX: STO) -10%, Liontown (ASX: LTR) -9%, New Hope (ASX: NHC) -9%, and South32 (ASX: S32) -9%.
Weekly snapshot: The standout last week was the hawkish commentary from the Fed, which weighed on market sentiment as credit markets priced in at least one Fed rate hike by Christmas.
- The week commenced strongly as the market embraced the US-Iran ceasefire, pushing up ~1.5% into a Wednesday high, with BHP one of the best performers.
- On Tuesday, the RBA left rates unchanged at 4.35%, though Governor Michele Bullock made it clear the inflation fight isn’t over.
- Market weakness commenced on Thursday after Kevin Warsh signaled there is a chance of a Fed interest rate hike in 2026.
- The market ended the week on the back foot with a 5.6% drop by BHP Group (BHP), wiping more than 50-points off the index, taking it back towards 8800.
With the end of the financial year fast approaching, portfolio positioning and tax-driven trading are likely to play an increasingly important role in shaping short-term market moves. From an economic perspective, the big news comes at the end of the week: US Core PCE inflation (Friday), the Fed’s preferred inflation measure, is likely to have a huge influence on the last few days of June.
Overseas markets were mixed on Friday night, with US markets closed for the Juneteenth holiday. In Europe, the German DAX slipped by -0.2% and the UK FTSE -0.4% in fairly quiet trade. In the US, the S&P 500 futures ended down -0.2%, with most eyes probably on the World Cup and the US v Australia game.
- SPI Futures are calling the ASX200 to open slightly softer on Monday following the lack of lead from Wall Street.
