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Australian equities sold off sharply after a red-hot Q3 inflation print forced investors to abandon any near-term easing hopes. Core CPI, the RBA’s preferred gauge, jumped 1.0% QoQ (vs 0.8% expected & 0.6% RBA forecast).
The ASX200 struggled on Tuesday under the weight of four major stocks tumbling by more than 10%, dragging the index lower from both a points and sentiment perspective. A strong banking sector couldn’t dig the bourse out of trouble, as health care and IT stocks were dragged underwater by sector giants CSL and WiseTech, each sinking more than 15%.
The ASX slipped as sharp losses in tech and healthcare weighed heavily – the market was fighting an uphill battle after CSL and Wisetech both had –15% days, accounting for –61pts of index weakness between them.
We are buying a Gold stock this morning
The ASX 200 advanced +0.4% on the last Monday of October, with winners and losers fairly evenly matched, but the influential banks and heavyweight resource stocks dragged the broader index higher. The combination of Friday’s strong session on Wall Street following the soft CPI and optimism over a US-China trade deal lifted the local market and US futures, which were up +0.7% when the domestic day session ended.
The ASX200 climbed today, lifted by broad-based gains as global sentiment improved on renewed optimism around a potential US–China trade deal and expectations for a Federal Reserve rate cut later this week.
We are making several changes across three portfolios today
Many economists have long warned that Trump’s tariffs would ignite a sharp rise in inflation, but that threat continues to be a dog that won’t bark. On Friday, another nail was driven into the hawks’ coffin as US inflation data came in softer than expected. Wall Street surged to new record highs, with the cooler print reinforcing market expectations that the Fed will deliver four to five rate cuts over the next year, starting with a 0.25% move this week.
The ASX200 ended the week up +0.3% with 8 of the main 11 sectors advancing. It was another week that saw investors “buy dips” while preferring to rotate between stocks/sectors as opposed to selling the market per se. Momentum traders had a week to forget with precious metals stocks getting whacked as gold and silver experienced their worst day in more than a decade, and even on Friday, gold traded in a $US100/oz range, although it again held support ~$US4,000.
The ASX eased into the weekend as investors stayed cautious ahead of next week’s high-stakes meeting between US President Donald Trump and China’s Xi Jinping, while news of the abrupt termination of US-Canada trade talks also added some complexity to the mix.
