The ASX 200 found support from some of 2026’s most unloved sectors on Monday, with some book-squaring seemingly at play ahead of today’s widely expected 0.25% RBA rate hike, priced at a 93% probability by Monday’s close. However, as has been the case of late, the session was more about switching than outright buying or selling, leaving the index just +0.2% higher as Financials added 33 points, almost entirely offset by a 31-point drag from Materials.
The local index bounced strongly this morning, recovering from a three-month low on Friday, poking its head above the 8700 level before giving most of it back through the afternoon. The modest gain was driven by banks and defensives rather than a broad-based recovery and while Financials, Healthcare and Utilities looked solid, higher oil prices and bond yields kept Technology and Materials under pressure ahead of tomorrow's RBA decision.
The Fed and RBA have taken different paths in the last few years, but both have ultimately started tightening again. The Fed began 2024 with rates at 5.25%-5.5%, cut aggressively by a total of 175bps to 3.5%-3.75% by December 2025, then paused as inflation pressures returned before hiking 25bps to 3.75%-4.0% earlier this month. In contrast, the RBA waited until February 2025 to start cutting and delivered just 75bps of easing, taking the cash rate from 4.35% to a low of 3.60% by August 2025. It's been hard work of late for local investors with higher interest rates and lower earnings growth:
e ASX 200 closed lower today, trading in a fairly tight range through the day, as technology stocks extended their recent slide for a fourth consecutive session and consumer discretionary came under further pressure, falling to a near four-month low. On the positive side, Consumer Staples firmed and Financials held up reasonably well, the two sectors doing the defensive work in what has been a difficult week shaped by rising rate expectations.
Early weakness saw the ASX 200 make fresh 3-month lows on Thursday following a soft session on Wall Street. The banks and miners finally danced to the same tune, but unfortunately it was a bearish one, which caused ~90% of the day's decline, led by BHP Group (-1.7%), Westpac (-1.8%), and Commonwealth Bank (-0.7%).
The ASX endured another difficult session today, and while the index encouragingly bounced ~60pts from the lows of the session after softer employment data partially pared back rate hike bets, a move higher in the cash rate remains almost fully priced in for next week’s RBA meeting.
The ASX 200 battled to a 0.1% gain on Wednesday, with BHP alone contributing about twice the index’s overall advance from a points perspective, masking underlying weakness in financials. At the stock and sector level, it was almost as if the market had tuned into yesterday’s MM webinar, “Investing in a 5% World,” with investors voting with their feet and compressing the valuations of long-duration growth stocks as bond yields remained elevated.
The ASX finished little changed on Wednesday as weakness across utilities, energy and the banks was offset by a strong session in the lithium and copper names as copper hit a record US$6.92/lb overnight, providing a strong backdrop for the resources sector. M&A continues to be a dominant driver for single-stock moves, though the broader market remained largely macro-driven, balancing stronger commodity prices against ongoing concerns around higher rates.
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