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Monday saw the currently fickle ASX 200 surge +1.9%, its best trading day since April, just one session after it plunged 2%. Yesterday’s gains were broad-based with all 11 sectors advancing along with 90% of the stocks, while the tech, real estate and materials sectors all gained by 3% or more.
The ASX staged a sharp relief rally today, with the main board chalking up its strongest single day move since April 25. The move followed last week’s aggressive sell-off and was driven by dip-buying across technology and resource stocks, with all 11 sectors higher.
What a week. Markets ran for cover as fears mounted that artificial intelligence (AI) could render many software business models redundant, or at least sharply devalue them. The issue was compounded by the fact that many of these software names were trading on lofty valuations in the anticipation of unrelenting growth. The potential risk of contraction compared to expansion has seen numerous household names halve in value over the last 6 months, from Xero and WiseTech on the ASX to Atlassian and Adobe in the US.
The ASX 200 ended a volatile week down -1.8%, but it felt far worse on Friday when the index tumbled more than 2% – at least it should recover half of those losses on Monday morning. We received a rate hike last week, but it hardly registered with investors, focusing on three major themes:
• The disruption by AI across the software sector, with negative sentiment spreading to tech in general.
• Profit-taking in the commodity markets with silver plunging over 16% in just a matter of hours.
• Risk off in general with Bitcoin plunging to its lowest level since late 2024.
The ASX was hit hard today, with its sharpest fall in nearly three months after heavy losses in US tech overnight, a fresh leg down in commodities and a violent unwind in crypto combined crushed global risk appetite.
We are amending the growth portfolio.
The ASX 200 had a fairly quiet day at the index level, while at the stock/sector level, it was like Guy Fawkes night, with fireworks flying in every direction. Thursday’s session saw further aggressive selling across the high-flying resources, while some recently out-of-favour stocks came back into favour as selective bargain hunting played out across the ASX. Perhaps some switching/rotation is taking hold as commodity prices look to cool.
We are making several changes to the International Equities Portfolio
The ASX snapped a two-day winning streak today, with a sharp pullback in commodities weighing heavily on miners and overwhelming broader strength across defensives and financials. Losses were concentrated in materials while money rotated into healthcare, insurers and the major banks, while tech trod water after yesterday’s savage sell-off.
We are making changes across two portfolios
