Australian Shares Rebound as Gold and Mining Stocks Drive Market Recovery

Avinash Puri3 hours ago

After a four-day losing streak, Australian shares edged higher on Monday, buoyed by gains in gold and mining stocks. The S&P/ASX 200 index (XJO) rose 0.2% to 7,962.3, stabilizing after touching a six-month low last Friday. However, the index remains nearly 7% below its record high from February 14, reflecting ongoing market volatility amid global trade uncertainties.

Market Drivers: Gold and Mining Stocks Lead the Charge

The Australian stock market had faced significant losses last week due to heightened global trade tensions and concerns over economic slowdown. Monday’s recovery was primarily driven by strong commodity prices, which helped push mining and gold stocks higher, offsetting broader market concerns.

Mining stocks (XMM) rose 0.9%, with BHP Group (BHP) gaining 0.6% and Rio Tinto (RIO) surging 3.1%. The rally was supported by higher iron ore prices, driven by hopes of economic stimulus measures in China.
Gold stocks (XGD) advanced 1.4%, benefiting from rising bullion prices as investors sought safe-haven assets amid a weakening U.S. dollar.
Energy stocks (XEJ) climbed 1.5%, reflecting broader strength in the commodities sector and expectations of stable global energy demand.

Financial Sector Under Pressure

Despite the market’s modest rebound, the financial sector remained under pressure, declining 0.1% and extending last week’s losses.

Commonwealth Bank of Australia (CBA) dipped 0.2%, while ANZ Group (ANZ) fell 0.6%.
Last week, financial stocks suffered a more than 4% decline, as analysts continued to warn about stretched valuations and potential downside risks.
“The big four banks may see additional pressure following Friday’s sell-off,” said Junvum Kim, senior sales trader at Saxo Markets, adding that investors are likely to remain cautious on financials in the short term.

China’s Economic Signals and Market Outlook

The latest economic data from China revealed persistent deflationary pressures, raising concerns over demand for Australian exports, particularly in iron ore and other commodities. However, the potential for government stimulus measures in China helped iron ore futures post modest gains, contributing to the rebound in mining stocks.

Henry Jennings, portfolio manager at Marcustoday Financial Newsletter, noted that if the ASX 200 experiences further declines, it could find support at 7,800 before stabilizing. He also highlighted that market sentiment remains fragile, with investors closely monitoring China’s economic policies and global trade developments.

New Zealand Market Gains as Fonterra Surges

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 index (NZ50G) rose 0.9% to 12,515.87, reflecting stronger investor confidence in the region.

Fonterra (FCG) soared 3.6%, after the dairy giant forecast higher annual earnings, citing strong volume and margin growth in its consumer division.
The New Zealand market has remained relatively resilient, supported by strong corporate earnings and positive sentiment in the dairy sector.

Market Outlook: Key Trends to Watch

Investors will continue to monitor several factors influencing market sentiment in the coming weeks, including:

Global trade uncertainties: Any developments in U.S.-China trade relations could have ripple effects on Australian exports and commodity markets.
China’s economic policies: Further signals of economic stimulus from Beijing could provide a boost to mining and resource stocks.
Commodity price movements: Continued strength in gold, iron ore, and energy markets could help offset weakness in other sectors.
Financial sector performance: The ongoing correction in bank stocks remains a critical factor in overall market stability.

Despite recent turbulence, analysts suggest that the Australian market retains strong long-term fundamentals, with the commodities sector likely to remain a key driver of growth and resilience.