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The ASX 200 started the week slowly, with the U.S session on Friday night largely in the rearview mirror, and closed for tonight, there was little in the tank to drive a move either way as strength across Energy, Materials and the banks was cancelled out by weakness in Technology. The market remains firmly in post-reporting-season mode, with attention shifting back to oil, bond yields and central-bank policy to determine the next move.
Bond markets and central banks are back in focus after Friday night’s August US jobs report came in far stronger than expected, with nonfarm payrolls rising by 162,000—more than triple consensus forecasts—while unemployment held steady at 4.1%. Labour-force participation also improved, and prior months were revised higher, reinforcing signs that the jobs market has rebounded from its early-summer softness, shifting attention firmly to this week’s CPI (inflation) data, with the resilient labour market increasing the prospect of a Fed rate hike at next week’s meeting.
The ASX 200 slipped 1% last week, with several major names trading ex-dividend, while sharp falls across Technology (-5.2%) and the influential miners (-4.6%) more than offset a return to the winners’ enclosure for Financials (+2%). The market remains in a holding pattern, which we feel is encouraging considering the macro and geopolitical headwinds from rising long-term bond yields to renewed private credit concerns after Bathla Group’s collapse and continued uncertainty around the next twist in the US-Iran conflict.
The ASX 200 struggled to hold onto a positive start on Friday, giving back an early ~0.6% gain to trade slightly lower into the afternoon. The reversal was largely a resources story, with the heavyweight names dragging on the index, while Energy also weighed despite Brent.
The ASX 200 bounced +0.5% on Thursday, regaining some of the previous session’s steep losses as the heavyweight banks, ably supported by the miners, combined to lift the index, not a bad performance with BHP, Coles, Amco and Woodside all trading ex-dividend. To put the banks’ strength into perspective, the Big Four alone accounted for ~50% of the market’s advance on the day.
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The local market found some support today, snapping a three-day losing streak as banks and miners led a modest rebound. The move was helped by some relief in bond markets, with the Australian 10-year yield easing from multi-year highs to around 5.16%.
The ASX 200 was clobbered 1.0% on Wednesday as broad-based selling rolled through the local bourse as surging global bond yields continued to dominate the financial press. More than 70% of the main board retreated, with the tech (-3.4%) and materials (-3.1%) vying for the wooden spoon as risk-off sentiment was evident across the market – the defensive-oriented consumer staples (+0.8%) were not surprisingly the best-performing sector.
The ASX came under pressure today as another surge in oil and global bond yields weighed on risk appetite. Crude oil pushed higher as tensions between the US and Iran escalated, adding to inflation concerns at a time when global central banks are already leaning increasingly hawkish.
The ASX 200 bounced strongly from its early morning low on Tuesday, recovering ~80% of its initial drop to end the session down just -0.1%. A solid performance in our opinion, considering the negative lead from global bonds as oil prices continued to climb on renewed tensions in the Middle East.
