Weekly wrap: market records and a 3.5% week show Australia enjoying its time in the sun

Weekly wrap: market records and a 3.5% week show Australia enjoying its time in the sun

The Australian share market closed slightly lower on Friday after a historic week in which it reached consecutive record highs.

Nervousness around the opening of the Strait of Hormuz carried over from the fall in the US market, but by the close, it had been reduced to a slim 8 points, or 0.1% off the ASX 200 which closed at 9263.6 points.

This marks a full 3.5% rise for the week, an increase that seemed unlikely just a couple of weeks ago.

Despite the ongoing uncertainties surrounding the ongoing conflict with Iran, these two record highs for the Australian market indicate that as enthusiasm wanes in certain sectors of the global Artificial Intelligence (AI) rally, Australia has suddenly become an appealing international investment destination.

Lack of AI is Australia's secret weapon

Our predominance of miners and banks and relatively small technology sector has caused our market to become one of the few global refuges from the potential AI blowback as a “float all boats” rally becomes much more nuanced and investors become concerned about the massive amounts of AI investment by some companies with no clear path to profit.

Gold and oil prices have risen due to concerns about peace negotiations following Iran's threats to bar United States and Israeli ships from traversing the Strait of Hormuz.

The proposed deal with Qatar is benefiting miners; however, elsewhere, the tone has become more cautious as investors wait to see how inflation affects the potential rise in interest rates.

Local investors also appear to be fairly confident about positive results leading up to a slew of profit reports expected in the coming week.

By the close, seven of the eleven sectors were lower, with energy notably rising by 0.6%. Woodside shares (ASX: WDS) were up 0.5% to $31.88, and Santos shares (ASX: STO) rose 0.4% to $7.66 while Ampol shares (ASX: ALD) rose 0.9% to $38.78.

At the other end of the market, the defensive healthcare sector fell 0.9%, largely due to weakness in ResMed shares (ASX: RMD), which fell 8.3% to .87 after the sleep device maker’s full-year results showed it would raise some of its prices to keep up with inflation. Financials were also weaker, led down by a 1% fall in Commonwealth Bank shares (ASX: CBA) to $178.01 as investors worried that full year earnings next week might show falling loan volumes. Others to follow it down included National Australia Bank shares (ASX: NAB), down 1.1% to $42.23, Westpac shares (ASX: WBC), down 1.6% to $37.93, and ANZ shares (ASX: ANZ), down 1% to $37.73. Heading in the other direction were shares in James Hardie Industries (ASX: JHX), which jumped 5.8% to $43.18 after its quarterly income surged 67% to $US104.3 million ($148 million). Nick Scali shares (ASX: NCK) fell 0.7% to end the day at $17.11 after revelations that their 31% surge in full-year profit was accompanied by the news that sales in the first few weeks of this financial year’s trading were flat.

Continuing their ascent since a trading halt after a rapid 33% rise on Thursday were shares in Alliance Aviation (ASX: AQZ), which jumped a further 6.1% to 83c after the company resumed trading. Also rising nicely were shares in lithium miners PLS (ASX: PLS) and Liontown (ASX: LTR), which rose 6.5% to $4.58 and 9.3% to $1.18 respectively, boosted by the improved outlook for the battery metal.

The week ahead

The coming week is a significant one for domestic factors with the two features being the Reserve Bank handing down its interest rate decision on Tuesday and the sector-leading Commonwealth Bank reporting its 2026 financial year results on Wednesday.

There is only a very slight chance of an official interest rate rise by the RBA but the commentary that comes with the decision will be particularly closely watched.

Inflation has been volatile and is sure to kick back up a little as fuel price rises feed through so even though the market is expecting rates to remain steady this year doesn’t mean that this wish will come true.

Big week for banking

As for the Commonwealth Bank results, most analysts expect a rise in earnings per share of around 6% for the year but they will have an eagle eye on whether margins and loan volumes are holding up in the face of a cooling property sector.

Throw in bad debt levels, increasing mortgage competition, dividends and AI driven productivity and there is plenty to watch out for.

Also contributing to the banking sector's news will be Westpac on Monday and ANZ on Thursday with third-quarter updates.

Profit results roll in

A host of other company earnings reports will also be released during the week including Car Group, Life360, Helia Group, SGH, Amotiv, Southern Cross Media, AGL, Computershare, Arena REIT, SEEK, Suncorp, Homecare Daily Needs REIT, Insurance Australia Group, ASX, Orora, Origin Energy, Treasury Wine Estates, Telstra, Transurban, QBE and Baby Bunting to name a few.

The US reporting season is winding down with companies reporting including Rocket Lab, Simon Property, Lumentum, Cardinal Health, CoreWeave, Super Micro Computer, Nebius, Cisco Systems, Applied Materials, JD.com, Ross Stores and Tapestry.

Of more importance will probably be the US Consumer Price Index (CPI), retail sales, and the Producer Price Index (PPI), which should show how cost pressures are hitting home due to the ongoing Iran war.