ASX 200 Pulls Back from 2-Month High

Australia's ASX 200 slipped 55 points, or 0.6%, to finish at 8,911 on Thursday, snapping a four-session winning streak. Early gains faded as sentiment turned sour after U.S. President Donald Trump warned that the new ceasefire with Iran was not final, raising fears the Middle East conflict could reignite. Meanwhile, the U.S. Federal Reserve held rates steady, as expected, but signaled that its next move might be higher, stoking caution. Local markets retreated from a two-month high, pressured by profit-taking, persistent inflation concerns despite a cumulative 75bp of rate hikes by the Reserve Bank since January, and fears that a potentially severe El Niño later in 2026 could fuel further price pressures in Australia. Among major sectors, non-energy minerals, consumer services, and utilities were mainly lower. Three of the four major banks fell between 0.6% and 1.1%, while notable laggards included Xero (-4.3%), Wisetech Global (-3.7%), PLS Group (-2.4%), and ASX Ltd. (-2.4%).

Australian shares edged up to 8,979 in early Thursday trade, extending gains for a fifth straight session and holding at a two-month high. A rebound in U.S. stock futures supported sentiment after President Donald Trump signed an interim agreement to end the conflict with Iran and reopen the Strait of Hormuz. Meanwhile, the Fed kept policy steady, as expected, in its first meeting under new chair Kevin Warsh. Domestically, the Reserve Bank left cash rates unchanged at 4.35% earlier this week, balancing slowing growth against persistent inflation. However, gains were capped by concerns over the impact of El Niño in Australia that could intensify into one of the strongest in decades by late 2026. Sector gains were led by logistics, healthcare, and consumer stocks, though weakness in non-energy minerals and industrial services capped advances. The four major banks rose between 0.4% and 1.2%, while notable movers included Pro Medicus (2.1%), Brambles Ltd. (1.7%), and QBE Insurance (0.9%).

The ASX 200 rose 49 points, or 0.5%, to finish at 8,966 on Wednesday, extending gains for a fourth session and notching a two-month peak. Sentiment was lifted by firmer U.S. futures ahead of Kevin Warsh’s first Federal Reserve meeting. At the same time, key details emerged on the interim U.S.-Iran agreement, which allows oil tanker passage through Hormuz in exchange for lifting port blockades. Locally, the Reserve Bank of Australia held cash rates at 4.35% Tuesday, in line with estimates, as the board balanced slowing growth against sticky inflation. Most sectors advanced, led by producer manufacturing, consumer services, and non-energy minerals. Index heavyweight BHP Group rose 0.6%, briefly hitting a record high. Meanwhile, gold miners surged as bullion rallied on Middle East news, with Northern Star up 2.5% and Regis 6.1%. Three of the four major banks added between 0.2% and 1.2%. In contrast, Karoon Energy slumped 13.4% after cutting its annual output forecast.