ASX 200 flat, materials shine while banks stumble
The ASX 200 remained relatively flat over the past week, posting a modest 0.03% gain. However, there was significant rotation amongst sectors. The materials sector, led by mining giants BHP Group (10.91%) and Rio Tinto (12.77%), was the top performer, buoyed by rising commodity prices. Fortescue also saw impressive gains of 14.01%. However, the financial sector faced significant selling pressures, with major banks such as Commonwealth Bank of Australia (-7.16%), National Australia Bank (-6.88%), Westpac Banking Corporation (-5.27%), and Australia and New Zealand Banking Group (-4.55%) all recording falling stock prices.
US market overview
In the United States, the S&P 500 (0.75%), NASDAQ (1.35%), and Dow Jones (0.27%) all closed the week in positive territory. The Information Technology sector (2.11%) led the gains, with NVIDIA (6.93%) being a notable outperformer, continuing the ‘AI’ thematic that has been dominant in equity markets over the past year. However, the Energy sector (-3.73%) faced challenges amid fluctuating oil prices. The Consumer Staples (-0.22%), Financials (-1.40%), Health Care (-1.40%), Utilities (-0.56%), and Real Estate (-1.01%) sectors also closed the week lower.
Global markets and currencies
European markets saw strong gains, with the FTSE 100 (1.10%), DAX (4.03%), and CAC 40 (3.89%) all closing higher. In Asia, the Nikkei 225 was up 5.58%, on the week to Friday 27 September but is expected to fall on the back of the election of the new Prime Minister Ishiba and his stance on monetary policy. The Shanghai Composite had a very strong week, up 12.81% on the back of government led stimulus package. While an exceptional return over a week, this is in the context of significantly weak markets over the past few years, with the Shanghai index down over 40% since it hit its 2021 highs. On the currency front, the AUD/USD was up 1.22%, the EUR/USD flat, while the Yen strengthened against the USD. Gold was up over the week at 0.93% while Bitcoin rose on the back of positive equity market direction.
The investors corner
While a strong commodities sector, particularly led by Iron Ore, is typically good news for Australian investors, 2024 has been a mixed bag so far.
Iron Ore, which had a tough year, saw prices drop from US$140/T to a low of US$91.3/T in late September before bouncing back. This recent surge coincided with China’s announcement of a new stimulus package, which has also boosted its equity markets.
In contrast, Gold has quietly appreciated by 30% since the start of the year, now reaching an all-time high of US$2654 as of 27 September. Interestingly, these gains are difficult to explain solely through traditional fundamentals like inflation hedging or safe-haven demand during volatility.
It’s tempting to view commodities as a single asset class, but their movements are driven by very different factors—from production costs to demand from emerging markets and pricing control by industry groups. This year’s contrast between Gold and Iron Ore illustrates how distinct those drivers can be, and how they impact stocks and indices in unique ways.
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