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Local shares moved lower through the day as US midterm results trickled in, with the Democrats taking control of the senate and triggering fears of tighter regulation across the AI and data centre industries, sending US futures lower and weighing on technology-linked miners.
We are making changes to the Active Growth & Emerging Companies Portfolios today.
Yesterday brought us the Melbourne Cup and another 0.25% rate hike by the RBA, taking the cash rate to 4.85%, its highest level in 18 years. The hike was totally expected, but overall the rhetoric from Michele Bullock supported our view that rates will now be on hold well into 2027, with the next move more likely to be a cut.
The ASX ultimately finished Melbourne Cup Day higher, but it was was struggling into the RBA decision, trading down around ~40 points, before rallying after the Bank delivered the widely expected 25bp hike. The split 6-3 vote, together with a more balanced message from Governor
The ASX 200 fell away on Monday ahead of the RBA and US mid-terms, with the miners and banks, the main contributors to the index’s 0.6% decline. The banks slipped despite Westpac (ASX: WBC) advancing +1% following its reasonable FY26 result, despite management warning the next 12–18 months of its UNITE transformation would be challenging – UNITE is WBC’s major, multi-year technology and operational transformation program, designed to simplify how the bank operates, reduce costs and improve customer experience.
Aussie shares finished lower as the market braces for another RBA rate hike whilst also digesting Friday’s sharp US tech sell-off, with weakness in banks, miners and supermarkets dragging the bourse down. A solid result from Westpac sparked divergence across the banking sector, with the remainder of the Big Four closing lower, while small caps and technology stocks showed relative resilience.
The US Tech Sector came under further pressure last week with aggressive pullbacks from the likes of Intel (-24%), Google (-13%), Palantir (-6%), Netflix (-6%), and Meta (-3%) weighing on the indices and general market sentiment. The issue last week wasn’t bond yields, but the latest earnings season exposing the growing cash-flow cost of the AI boom.
The ASX 200 finished up +1.3% last week, and +1.4% for October, an impressive performance considering the volatility on overseas markets around the AI Trade. The miners bounced well, although it’s going to be a tough start on Monday, while the banks also enjoyed a solid week, with ANZ, our preferred member of the “Big Four”, making a new all-time high. However, consumer-facing stocks remained under pressure, with the consumer staples (-5.1%) and consumer discretionary (-2.4%) sectors weighing on performance.
It was shaping up to be a very strong finish to October for the ASX early today, with the index up almost 1% and briefly pushing back toward 9,000 for the first time since early September. Unfortunately, the strength didn’t last. The ASX steadily gave back most of its gains through the afternoon as weakness in global technology stocks, resources and selected growth names weighed, eventually closing ~80 points below the early session highs.
We are making changes to our Active Growth and Active Income Portfolios today.
