Weekly Wrap: Market Rollercoaster – Mining Stocks Surge While Retail and Tech Tumble
Like a duck cruising across a pond, the Australian share market swept along to a slight drop on Friday but there was plenty of activity happening beneath the surface.
A big rally in mining stocks was more than totally offset by falls in the retail, real estate and technology as Donald Trump once again spooked markets by saying that he planned to impose blanket levies of between 15% and 20% on most trading partners.
That is well above the 10% that is proposed for Australia with the prospect of higher tariffs obviously a negative factor for the local market.
At the start of trade, the ASX 200 index rose above the important barrier of 8600 points but by the end of trade the index was down 9.1 points or 0.1% to 8580.1 points.
Across the week the index fell by 0.3%.
The big switch came after Trump told NBC News that he plans to impose blanket levies of 15% to 20% on most trading partners and also a 35% tariff on Canadian goods.
Miners buoyed by Chinese recovery
Not even Trump tariff moves could derail the big rally in mining stocks with a move in iron ore futures in Singapore to a two-month high close to the important $US100 a tonne level caused Rio Tinto (ASX: RIO) shares to rise 2.3% to $111.10, while BHP (ASX: BHP) shares firmed 2.8% to $39.36 and Fortescue (ASX: FMG) shares added 2.9% to $16.98.
Helping the mining renaissance was some Chinese inflation figures that suggest the country is finally responding to stimulus measures and breaking out of its consumer deflationary spiral.
Rare earth stocks were also on a tear after the US Department of Defence agreed to take a 15% stake in US producer MP Materials, causing its shares to jump by 50%.
In response Australian rare earth companies rallied, with shares in Lynas (ASX: LYC) up 16.7% to $9.67 and Iluka Resources (ASX: ILU) shares rising 22.9% to $4.89.
Overall though, the market failed to hold above the 3600-point mark thanks to a week of great uncertainty about Trump’s tariff plans
Real estate comes off the boil
Some of the biggest falls happened in the previously buoyant real estate sector with Goodman Group (ASX: GMG) down 1.8% to $33.74, Scentre Group (ASX: SCG) losing 1.3% to $3.70 and GPT (ASX: GPT) down 1.4% to $5.01,
Similarly technology stocks lost their mojo, with Xero (ASX: XRO) down 1.5% to $173.83, TechnologyOne (ASX: TNE) losing 2.5% to $39.49 and shares in Life360 (ASX: 360) down 1.5% to $32.30.
Among all of these falls there was the odd rise with shares in Johns Lyng (ASX: JLG) surged by 22.6% to $3.90 after agreeing to sell itself to Pacific Equity Partners in a deal that values the building services business at $1.3 billion.
Shares in lithium producer IGO (ASX: IGO) rose 1.8% to $4.60 after it announced that it will withdraw from its Fraser Range joint venture with Carawine Resources (ASX: CWX).
Carawine shares fell 2.1% to 9.5¢.
Shares in Australian Strategic Minerals (ASX: ASM) rose 8.4% to 58¢ after it released a positive scoping study that reduced the cost of its Dubbo project by more than $900 million.
The week ahead
Jobs are the big announcement coming in Australia in the coming week with the labour force numbers out on Thursday expected to show the economy added about 20,000 new jobs in June.
Other local announcements include numbers on consumer confidence, building activity and arrivals and departures.
Chinese announcements could add weight to the lift in mining shares with international trade, economic growth and retail sales all expected to be much firmer.
In the US there is a massive swag of releases ranging from inflation to retail sales although the continuing tariff announcements from President Trump are more likely to move markets than what has happened as viewed in the rear vision mirror.
The other US action to watch this week is the start of the June quarter results which largely features the US banking sector.