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Looking around the ASX, it’s looking pretty healthy – so long as Commonwealth Bank (ASX:CBA) doesn’t continue to get sold off too rapidly.
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We were back in the 8,700s in Tuesday intraday trades after a Monday sell-off, but that didn’t last into mid-afternoon. CBA shares were down nearly -3% as at 1.45pm AEST, bringing CBA MoM losses over -5%.
Helping matters is that BHP (ASX:BHP) is up around +15% MoM, with a recent surge in iron ore prices on the SGX helping that stock without doubt.
It looks like, for now – or, before August 1 at least, when the White House is meant to re-impose sweeping tariffs – a materials rotation could be really getting underway.
But why is that?
Enter the Tibetan Megadam
While China’s property market remains convoluted (to put it lightly) and sentiment uncertain, there’s one big catalyst helping the iron ore price.
Despite steel oversupply concerns coming from the world’s #2 economy, China has given traders a reason to be bullish – the country is building the world’s largest hydro dam in Tibet.
This is set, by most analysts’ calculus, to ensure a healthy base of demand for iron ore across the life of the construction project, which is of the scale and sheer immensity only China is known for.
When it’s complete (assuming the country’s struggling economy can bring the project to completion within budget, which almost never happens with megaprojects), it will be the world’s largest hydroelectric dam in history. It’s hard to conceptualise that.
At any rate, the project is valued at around A$260B and is intended to span a 31-mile-long section of mountainous terrain where steep drops offer the potential for massive hydro generation.
An ESG boasting point to be sure, if you ignore that China continues to ramp up coal generation.
Bitcoin’s back on the radar
Our second piece of news from abroad relates to the digital gold that is Bitcoin – as far as you accept that the asset is acting like a safe haven lately.
A safe haven overseen by the most uncertain figure affecting markets right now, none other than US President Donald Trump.
That’s because his Wall Street-listed Trump Media company has moved to buy US$2B worth of Bitcoin with a view towards creating a “crypto treasury.”
What does that mean? Who knows. But earlier this year, Trump was quite enthusiastic to talk about a crypto reserve in the same vein as Fort Knox.
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In this instance, the term treasury seems to imply Trump Media could become some kind of quasi-governmental entity, which would be fairly on brand and not that surprising given the current backdrop.
At any rate, it’s another sign of confidence in the mid-to-long-term stability of Bitcoin – which, as of yet, hasn’t necessarily responded dramatically.
Shares in Trump Media, however, have – it’s jumped over +5% to US$19.25/sh.
Still, with that said, one-year returns in DJT remain down nearly -50%.
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