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The expected policy path of central banks, especially the RBA and the Fed, has been the main driver of the ASX’s relative performance in recent weeks. The chart below of US and Australian short-dated bond yields illustrates the divergence that weighed on local risk assets – Australian 3-year bond yields increased ~0.5% from their recent lows while the US 2s edged down towards fresh multi-year lows.
The ASX 200 bounced back +2.4% last week following dovish comments from several Fed members. Gains were broad-based, with tech, materials, healthcare, and the industrial sectors all advancing by over 4%; only the Energy sector failed to advance. This week’s rise on the ASX came despite Wednesday’s higher-than-expected local inflation figures, which prompted speculation from some that the RBA may hike interest rates next year. Even so, the future path of Australian interest rates remains debated, and some market economists maintain the RBA could still cut rates from today’s level of 3.6% – MM believes there will be no change, just plenty of speculation until 2027.
The ASX closed the week on a steady footing, showing resilience despite a lack of direction from offshore markets, with the US closed last night for Thanksgiving, and only a shortened Black Friday session tonight. With no meaningful lead from Wall Street and limited local corporate news flow, the local market leaned on strength in tech, defensives and gold, helping offset weakness across financials and insurers.
The ASX 200 drifted lower yesterday afternoon, surrendering most of the day’s early gains to close up just +0.1%. The winners and losers arm wrestle was a close affair, but the bulls eventually triumphed, marking the index’s longest daily winning streak since May, as renewed strength in the tech sector and the growing probability of a December interest rate cut from the US Fed put investors in a buying mood the day before Thanksgiving holiday, albeit tentatively.
The ASX couldn’t hold early gains, with weakness in the oil names overpowering a solid tech-led rally. By the close, the ASX 200 was up just +10pts, despite nine sectors trading higher.
The ASX200 advanced +0.8% on Wednesday, although another hot CPI reading took the edge off the strong performance. Well over 70% of the main board closed higher, with the miners again the shining light while the banks reversed early gains with two closing lower as the influential sector struggles in the face of no further rate cuts by the RBA.
A hotter-than-expected inflation print has poured some cold water on what was shaping up as a very strong rebound for the ASX today. The market opened firmly, riding a strong lead from Wall Street and growing conviction around a December cut from the US Fed — but local data somewhat changed the tone.
The ASX200 limped into the close on Tuesday finishing the day up +0.1%, after spending most of the day swinging between positive and negative territory. A sell-off in the banking sector all but wiped-out the markets initial gain with a ~7% plunge by Bendigo Bank leading the decline.
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