Good Afternoon and welcome to HotCopper’s ASX Today for Monday of Week 21, I’m Jon Davidson, and after Wall Street closed red on Friday it’s proven the ASX does have further to fall after all.
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The bourse was down towards one and a half percent in early arvo trades, the XJO now eyeing 8,500 points range. Not long ago we were at record highs of 9,200 points. So what’s going on?
Profit takers descended on Wall Street on Friday after traders sought to lock in gains following an uneventful meeting between Trump and Xi Jinping that didn’t meaningfully address what investors wanted to hear: any progress towards concluding the war in Iran.
Cue Brent Crude prices at $111 a barrel in the greenback on Monday, gold not far off $4,500 an ounce, even copper’s taking a hit just below $6.20 a pound at the time of writing. We’ll get to the ASX in a minute but it’s worth lingering on the US for context.
Last week we got two batches of inflation data from the States: first, CPI’s up, we all know what that is, but then we got US PPI, which tracks the price of making stuff and providing services. That latter basket shows wholesale inflation climbed 6% in the twelve months to April in the US, suggesting tariff pain is trickling in. That’s accelerated a bond sell-off, and also a jump in the USD, as the world now expects a rate hike from the Fed next month.
But seeing as Trump pick Kevin Warsh is now in the driver’s seat after Jerome Powell’s tenure ended last week, nobody’s sure whether Warsh will act as a Trump loyalist or MAGA Moderate. That uncertainty is also dulling sentiment, but, NVIDIA reports later this week. That could re-inject some much needed optimism, which would be good for us down under.
And speaking of down under, let’s focus on what’s happening on the ASX now.
BHP Ltd was down over -2% intraday on Monday as a sour mood defines the market, but also after copper prices dipped over the weekend. Copper is the megatrend metal that’s defied Iran war headwinds and BHP’s gone all in, but now investors need to adjust to a world where daily fluctuations in the copper price effect BHP’s share price, maybe more than iron ore. Also worth noting, Morgan Stanley now classifies BHP an AI play, because of how much copper is needed in data centres. Finally, we have a tech giant, if you squint.
Looking at smallcap materials, Northern Minerals fell -8% intraday Monday after the Foreign Review Board forced a range of Chinese shareholders to divest their stake in the company on national security grounds where related to critical minerals; this is the second forced sale for Northern’s board on record.
Finally, in more positive news for shareholders, fresh listee Ktek Aerosystems surged over +100% on Monday, its debut on the bourse; the Israeli drone tech company is backed by a range of big names on the east coast and with the Iran war still rolling on, the company’s value prop there is obvious. That came at the detriment of Droneshield, where I’d wager some capital has been reallocated from.
More of the same, really. That’s the ASX Today for Monday, I’m Jon Davidson, have a great night and we’ll see you tomorrow.
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