The ASX 200 finished a soft week on a positive note as miners rebounded strongly on Friday, although the Materials sector still ended the week as the worst performer, down -4.4%. Fresh fighting between the US and Iran combined with a sharp unwind of the AI Trade to weigh on the miners and risk sentiment in general. Encouragingly, improving market breadth helped cushion the downside, with each of the past three sessions following a similar pattern: early weakness attracted bargain hunters, allowing the market to recover and close near its highs.
Last week’s winners and losers were a mixed bunch; the winners were primarily made up of upgrades and M&A activity, while the losers were a trifecta of gold, lithium and defence names.
Winners: Mesoblast (ASX: MSB) +9%, Santos (ASX: STO) +7%, Fletcher Building (ASX: FBU) +7%, Vault Minerals (ASX: VAU) +7%, Netwealth (ASX: NWL) +5%, ASX Ltd (ASX: ASX) +5%, REA Group (ASX: REA) +5%, and Megaport (ASX: MP1) +5%.
Losers: Minerals 260 (ASX: MI6) -18%, Electro Optic (ASX: EOS) -17%, Elevra Lithium (ASX: ELV) -16%, IperionX (ASX: IPX) -13%, Pantoro Gold (ASX: PNR) -13%, PLS Group (ASX: PLS) -11%, Austal (ASX: ASB) -11%, and Evolution Mining (ASX: EVN) -9%.
Weekly snapshot: The standout last week was fresh fighting between the US and Iran, while locally economic news was thin on the ground:
- The main action early in the week was noticeable rotation out of the resources into a broader basket of stocks led by healthcare, energy and financials.
- M&A continued in the gold sector with Genesis Minerals (ASX: GMD) launching a $5.6bn scrip-and-cash bid for Vault Minerals (ASX: VAU), trumping Regis Resources’ existing proposal
- On Wednesday/Thursday, fresh fighting in the Middle East sent oil prices higher, increasing volatility on the ASX and selling across the miners.
- The ASX ended the week with a strong session as the miners bounced, with the recovery set to continue on Monday with BHP closing up ~50c in the US on Friday night.
Next week is quiet for domestic data, but things are set to be more interesting in the US, with news likely to be dominated by US inflation, with Tuesday’s CPI report the key event for global financial markets. Also, Fed Chair Kevin Warsh’s congressional testimony will be closely watched for clues on the policy outlook, while the Beige Book will provide a fresh read on economic conditions ahead of the next FOMC meeting. US corporate earnings season also begins in earnest, with results due from JPMorgan, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley, kicking off second-quarter reporting.
Overseas markets ended the week in an upbeat mood ahead of US earnings season, shaking off worries around geopolitical uncertainty. In Europe, the German DAX slipped by -0.2% while the UK FTSE advanced by +0.2%. In the US, the S&P 500 led the gains, advancing +0.5% with the NASDAQ not too far behind, up +0.3%.
- The SPI Futures are calling the ASX200 to open up +0.5% on Monday following the strong session on Wall Street.
