The ASX 200 recovered impressively from an early sell-off to finish the final session of August down just -0.2%, a better outcome than we expected, with the Big Four banks adding around 30 points to the index. Interestingly, while resources retreated following Fed Chair Warsh’s hawkish comments on Friday and renewed tensions between the US and Iran, there was little evidence of broad-based selling.
The ASX 200 started the week on a relatively subdued note, finishing mildly lower with a strong rebound across the banks largely offset by heavy selling in Materials and Technology.
Two weeks ago, Scott Bessent emerged as one of the most interventionist US Treasury secretaries in decades, in an attempt to stem the increasing burden of the rise in US borrowing costs.
The ASX 200 edged +0.37% higher last week courtesy of a strong close on Friday afternoon and another strong performance from the Materials sector (+2.5%). Earnings season remained broadly constructive, with estimated profit growth running at ~11%, although the improvement remains heavily concentrated in resources and energy, stripping those sectors out reduces growth to around ~5%. Financials have now fallen for three consecutive weeks amid housing and mortgage concerns, while Consumer Discretionary also struggled as higher rates and slowing housing activity weighed on earnings & sentiment following this week’s higher than expected CPI.
The ASX 200 finished the week on a firmer footing, bouncing around after Thursday’s broad sell-off. The recovery was led by tech stocks, which snapped back strongly after a tough couple of sessions as Nvidia and Salesforce’s overnight rallies reignited enthusiasm for the AI trade and Software trades. The banks and miners also provided support, with seven of 11 sectors higher through the afternoon.
The ASX 200 was clobbered on Thursday, as a trifecta of bad news overshadowed another impressive result from Nvidia. Selling was broad-based, with more than 75% of the main board leading the market's worst day since June. Globally, it was a session that favoured semiconductors over miners, an unfortunate combination for the local market given the ASX is heavily exposed to the latter and has virtually none of the former:
It was a slow and painful session today with the ASX sliding hour by hour through to the close in a broad-based sell-off, with 10 of 11 sectors lower, as yesterday’s hotter-than-expected CPI print drove bond yields higher and sharply increased expectations for another RBA rate hike.
The ASX 200 surrendered early gains on Wednesday after inflation data came in far stronger than expected, weighing heavily on overall sentiment and specifically the rate-sensitive names. Just to compound the market’s woes, yesterday's reporting wasn’t kind, with major disappointments from Worley (-10.8%), WiseTech (-10.1%), and Flight Centre (-7.4%) offsetting further strength in gold and copper names.
The ASX 200 looked set for a third straight gain early on, trading as much as 0.6% higher to ~9220, before July inflation completely changed the tone of the session. The index reversed sharply after the release and ultimately finished lower with the market quickly pricing a greater chance that the RBA will need to go again on rates. Financials swung from an early gain into the red as higher rate expectations weighed on the market. Consumer Staples were the standout, holding onto a gain after a solid result from Woolies, while Materials remained one of the few reliable areas of strength early before giving back gains in the afternoon.
The ASX 200 enjoyed a more broad-based advance on Tuesday, with 70% of the main board closing higher, pushing the index up +0.7%. The banks finally gave the index a helping hand, but they still couldn’t figure in the top 3 stocks contributing to the market's 62-point advance; the podium was headed by BHP, again (+9 points), followed by CSL (+7-points), and Suncorp (+5-points). Elsewhere, we saw some profit-taking creep into the high-flying gold sector while the tech stocks more than picked up the slack, taking their cue from a reversal higher by the semiconductor-driven Korean KOSPI Index.
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