Australian Stocks Follow Wall Street Lower

Australian shares slipped 79 points, or 0.9%, to 8,574 in early Thursday trade, unwinding the prior day’s rebound as U.S. futures weakened after Wall Street’s sharp slide Wednesday on inflation worries and renewed Middle East tensions. Locally, signs of a cooling economy grew after Westpac reported average monthly mortgage applications have fallen about 18% since late 2025, reflecting uncertainty and looming tax changes. Meanwhile, Australia's business sentiment improved in May but remained firmly negative, due to concerns over the impact of elevated borrowing costs. Still, losses were tempered by hopes the Reserve Bank may pause cash rates next week after three hikes this year. Most sectors retreated, led by non-energy minerals, logistics, process industries, and financials. Lynas Rare Earths dropped 3.6%, followed by Northern Star Resources (-3.0%), and Evolution Mining (-2.5%). Mining giant BHP Group slipped 1% while the four big banks declined between 0.9% and 1.8%.

The ASX 200 advanced 49 points, or 0.6%, to close at 8,653 on Wednesday, halting losses in the prior three sessions amid solid gains in retail trade, logistics, utilities, and transport. Traders shrugged off weaker U.S. futures, betting the Reserve Bank of Australia may pause cash rates next week after three hikes this year. Meanwhile, business sentiment in May improved, with the reading hitting a three-month high despite staying in negative readings, while business conditions held steady. In main trading partner China, annual inflation was stable at 1.2% in May, with transport costs rising while food prices posted the steepest drop in seven months. Notable gainers included Coles Group (5.0%), CSL Ltd. (3.5%), Woolworths Group (3.2%), and Aristocrat Leisure (2.2%). Three of the big four banks also rose between 0.9% and 2%. In contrast, Sigma Healthcare slumped 5.5% after confirming preliminary talks over a potential acquisition of British pharmacy chain Boots.

Australian equities rose 29 points, or 0.3%, to 8,633 in Wednesday morning trade, snapping a three-session losing streak on strength in logistics, consumer services, and retail. Sentiment was supported by robust May trade data from top trading partner China, where exports hit a record, and imports accelerated. Locally, Australia's trade surplus shifted to a surplus in April as exports rebounded. Meanwhile, hopes grew that the Reserve Bank will pause cash rates next week after three hikes this year. However, gains were capped as U.S. stock futures slipped as tensions in the Middle East ramped up again following Washington’s “self-defense strikes” against Iran in response to a helicopter downing Tuesday. Early standouts included PLS Group (2.0%), Insurance Australia Group (1.9%), and Medibank Private (1.2%), while two of the big four banks posted modest gains. Investors now await China’s May CPI and PPI data later today, amid signs of growing inflationary pressures in recent months.