What Mattered Today

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The ASX 200 hit a five-month high today after softer-than-expected inflation all but removed the prospect of an August interest-rate hike with healthcare, consumer discretionary and consumer staples leading a broad-based rally.

Headline inflation slowed to 3.8% in June, below the 4% expected, while trimmed mean inflation held at 3.6%. Markets removed any prospect of an August hike (was 21% before the release) sending bond yields (Aussie 3’s -7bps) and the Australian dollar lower. The market is still pricing in some chance for a hike latter in the year, but’s it’s now a 50/50 call, and we think the next  move will be down, opening the door for a further rally in the market, particularly the rate sensitive areas.

• ASX 200: +90.81pts / +1.01% to 9,038.60
• AUD/USD: 0.6957 / -0.26%
• Best sectors: Healthcare +4.24%, Consumer Discretionary +2.37%, Consumer Staples +1.98%
• Worst sectors: Financials +0.18%, Utilities +0.25%, Industrials +0.48%
• Temple & Webster Group (TPW) +8.36% to $5.83 was the strongest stock in the ASX 200 as investors returned to interest-rate-sensitive consumer names following the softer inflation result. TPW has been weak of late, so has a lot of leverage to an improving consumer outlook. This is one to keep on the radar.
• Lovisa Holdings (LOV) +7.88% to $24.64 also rallied for the same reasons.
• CSL Ltd (CSL) +7.15% to $128.07 led healthcare higher after announcing plans for clinical trial work expected to begin in mid-2027 to support regulatory approval of its next-generation Horizon 2 manufacturing process.
• Domino’s Pizza Enterprises (DMP) +5.28% to $17.96, Eagers Automotive (APE) +5.27% to $23.78, Nick Scali (NCK) +4.81% to $16.35 and JB Hi-Fi (JBH) +4.67% to $81.80 all benefited from the improved interest-rate outlook.
• Stockland (SGP) +4.96% to $4.44 rallied as lower bond yields supported housing and property-exposed stocks.
• Mineral Resources (MIN) +4.75% to $55.62 gained after delivering a strong June-quarter result, with lithium and mining-services volumes ahead of expectations and operating costs below forecasts. Net debt also improved to $4.3bn from $4.5bn.
• Rio Tinto (RIO) +3.67% to $165.39 advanced after reporting a 43% increase in first-half underlying earnings to US$6.85bn, modestly ahead of expectations. Higher copper production was the key driver of the stronger result.
• BHP Group (BHP) +1.36% to $60.18 and Fortescue (FMG) +2.03% to $19.08 also gained as the diversified miners remained well supported.
• Xero (XRO) +4.11% to $70.47 and TechnologyOne (TNE) +3.44% rebounded, although technology was not among the leading sectors as volatility across global semiconductor markets remained elevated.
• ResMed (RMD) +3.59% and Sonic Healthcare (SHL) +3.23% joined the broader healthcare rally.
• Woolworths Group (WOW) +1.91% to $40.55 and Coles Group (COL) +2.48% to $24.38 benefited from the move into consumer staples and the easing in domestic rate expectations.
• Woodside Energy (WDS) +1.39% to $32.74 gained after June-quarter revenue rose 35% to US$4.19bn. The company narrowed full-year production guidance to 174–185mmboe from 172–186mmboe.
• The banks lagged the broader rally as investors rotated toward more rate-sensitive sectors. Commonwealth Bank (CBA) -0.07% to $178.66, National Australia Bank (NAB) -0.02% to $41.20 and Westpac (WBC) -0.21% to $37.94 edged lower, while ANZ Group (ANZ) +1.37% to $37.73 outperformed.
• Goodman Group (GMG) -1.08% to $29.26 declined despite the broader support for rate-sensitive assets, while Macquarie Group (MQG) -0.59% to $254.95 also eased.
• Megaport (MP1) -8.40% to $16.35 was the weakest stock in the ASX 200, extending the recent volatility across AI and data-centre-linked names.
• Liontown Resources (LTR) -7.92% to $1.11, Bellevue Gold (BGL) -5.95% to $1.27, IperionX (IPX) -4.92% to $3.09 and Challenger (CGF) -4.17% to $10.10 were also sharply weaker.
• Uranium stocks remained under pressure, with Paladin Energy (PDN) -3.17% to $8.86, Deep Yellow (DYL) -3.42% to $1.27 and Sims Ltd (SGM) -3.48% to $24.93 among the laggards.
• Perpetual (PPT) -2.03% to $19.77 fell after rejecting EQT’s revised $22.50-per-share takeover proposal, although it agreed to provide the bidder with limited access to non-public information. Perpetual also reported a 2.3% quarterly increase in FUM to $224.4bn.
• Brent crude: +3.6% to approximately US$87.08/bbl, ending a three-day decline as fresh fighting erupted in the Middle East.
• Gold: around US$4,040/oz, holding recent gains as dip-buying continued despite elevated geopolitical and inflation risks.
• Asian markets: South Korea’s Kospi fell around 6.4%, extending its two-day loss to ~16%, while Japan’s Nikkei 225 declined 1.6%.
• China +0.3% and Hong Kong +1.6% were higher
• S&P 500 E-mini futures: -8.25 points / -0.11%
• Dow E-mini futures: -53 points / -0.10%
• US companies we own reporting this week; Ashland (ASH US), Peabody Energy (BTU US), Chipotle Mexican Grill (CMG US), IREN (IREN US), Microsoft (MSFT US) and UBS Group (UBS US).