It’s days like this that reinforce the importance of staying invested, participating in markets despite the negative headlines and bearish rhetoric, and, above all, remaining patient. With SPI futures flat this morning, investors took the bull by the horns, buying equities and pushing the ASX to its highest level since March as easing oil prices encouraged a rotation back into growth stocks, banks and healthcare. The rally was broad, with nine of the eleven sectors finishing higher and the local market comfortably outperforming modest gains in US futures.
The ASX 200 erased early losses on Monday to start August on the front foot, closing up +0.5%, back above the psychological 9000 level. Gains were broad-based, with fewer than 30% of ASX stocks closing lower. Just as importantly, selling pressure was limited; the day's worst performer, Fortescue (FMG), fell only 3.8%, while six stocks rallied more than 5%, highlighting the market's underlying strength.
The ASX 200 recovered from a weak start to finish +42pts higher today, a good ~80pt turnaround from the lows with utilities, industrials and consumer discretionary stocks leading the advance. Australian futures had initially pointed to a decline of around 1%, but sentiment improved after President Donald Trump called off planned strikes against Iran and pushed for renewed negotiations, reducing the immediate risk of a larger regional conflict.
Despite a volatile month, the ASX 200 ended July up +2.3%, delivering almost exactly its average return over the past 20 years as the market heads into August. As we all know, there are “lies, damned lies, and statistics”, but keeping it simple, as the chart below illustrates, July is usually a very strong month for the local index:
The ASX 200 finished a volatile week up +2.3%, reaching a four-month high on Wednesday after softer-than-expected inflation data reduced fears of higher interest rates. The ASX shrugged off a sharp pullback earlier in the week by the “AI Trade” and a 1150-point drop by the Dow on Wednesday night after hawkish comments from Fed Chair Warsh - as we’ve been saying through July, the local market is slowly starting to get its “Mojo” back as we head into reporting season.
The ASX 200 finished modestly higher today, securing a fourth consecutive monthly gain despite giving back most of an early rally. The index traded as high as 9,059 before closing just +9 pts higher (down ~85pts from the open), with strong gains across materials, selected technology names and gold miners offset by weakness in healthcare, consumer staples and communications.
The Dow recovered over half of Thursdays decline overnight as Microsoft surged +15.5% after strong Azure cloud growth reinforced confidence that AI infrastructure spending is yielding results, sparking a broad rebound across semiconductor stocks. The iShares Semiconductor ETF (SOXX) climbed more than +8%, with Micron Technology jumping +18% and AMD rising more than +13%, while South Korean memory giant SK Hynix rallied over +17%. The move reignited the momentum trade, with the iShares MSCI USA Momentum Factor ETF (MTUM) gaining more than +5% as investors rotated back into AI-linked names.
In contrast, Meta Platforms fell 8% after issuing softer revenue guidance and reporting a 91% decline in second-quarter free cash flow. Volatility may be high at the stock level, but this earnings season continues to support US indices, with ~68% of stocks beating EPS and ~79% on the revenue line - the balance of the S&P 500 stocks are due to report in the coming fortnight, with the local names also getting ready to face the music in August.
The ASX 200 snapped a three-day winning streak today, retreating from yesterday’s five-month high as investors reduced risk following a sharp sell-off in the US. Materials and consumer stocks under most pressure, although strength across technology and selected energy names helped cushion the decline.
The ASX 200 surged through 9000 yesterday, closing up +1% at a fresh 4-month high, supported by a soft inflation read (CPI). Gains were fairly broad-based for a triple-digit day with ~70% of the main board advancing, led by the rate-sensitive stocks. As we’ve alluded to in the last few morning reports, the ASX has been getting its mojo back of late, and the soft CPI hasn’t hurt the backdrop for local stocks. Even the Australian Financial Review quoted our comments along these lines overnight:
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
Verication email sent.
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
!
Invalid One Time Password
Please check you entered the correct info, please also note there is a 10minute time limit on the One Time Passcode
To reset your password, enter your email address
A link to create a new password will be sent to the email address you have registered to your account.
Market Matters members receive daily market reports, real-time trade alerts, full access to 5 portfolios and dynamic company data.
Choose how you'd like to proceed:
We have a range of membership options to suit your needs and budget, why not join today and get unlimited access to the premium Market Matters service.
