Australia Stocks Extend Strength, Weekly Drop Still Looms

Australian shares rose 32 points, or 0.4%, to 8,673 in Friday’s morning session, marking gains for a second day after Wall Street hit fresh records overnight. Optimism around the US-China summit in Beijing helped ease lingering concerns over the Middle East conflict, while bargain hunters continued to step in following recent losses that dragged the ASX 200 to a five-week low. Broad-based strength was seen across sectors, led by electronic technology, industrial services, and logistics. The big four banks advanced between 0.5% and 3.2%, with notable moves from Computershare (2.8%), QBE Insurance (2.1%), and Woolworths (1.2%). However, the ASX 200 index remains on track to finish the week lower, down about 0.8% so far, as persistent domestic inflation worries weigh on sentiment. Analysts noted the 2026/27 federal budget offered little to alter the Reserve Bank’s near-term policy outlook, keeping investors cautious despite the rebound.

Australia’s S&P/ASX 200 edged up to close at 8,641 on Thursday, snapping a four-session losing streak as gains in consumer durables, process industries, and industrial services lifted sentiment. Optimism improved after President Donald Trump, speaking at a Beijing summit with Xi Jinping, said U.S.–China ties would become “better than ever before,” with talks set to cover trade, tariffs, Taiwan, and Iran through Friday. Locally, focus turned to the 2026/27 federal budget. Commonwealth Bank analysts noted sizeable savings alongside substantial new spending, but judged the fiscal plan unlikely to shift the Reserve Bank’s near-term policy outlook or meaningfully ease inflation. Three of the big four banks advanced, while BHP Group (1.1%), Macquarie (2.8%), and Insurance Australia Group (3.3%) also strengthened. In contrast, Lynas Rare Earths slumped 10.4% as investors unwound the geopolitical premium in critical minerals amid renewed U.S.–China diplomatic engagement.

Australian equities edged lower to hover around 8,623 in early Thursday trade, marking a fifth straight decline and a five-week low. Risk appetite waned after Canberra’s 2026 budget warned of severe fallout from the fuel crisis, with measures unlikely to shield the economy fully. Traders also cautiously awaited May inflation expectations data after April’s reading surged to the highest since late 2022, underscoring renewed cost pressures that have persisted since the second half of last year. Still, weakness was capped by hopes that the upcoming meeting between U.S. President Trump and China's leader Xi Jinping could ease global trade tensions. Commercial services, consumer non-durables, and healthcare weighed on the ASX 200, though strength in consumer services helped limit the decline. The big four banks fell between 0.2% to 1.7%. Other notable laggards were Lynas Rare Earths Ltd. (-2.0%), Xero Ltd. (-1.3%), and PLS Group (-1.2%).