Australian Stock Market Rebounds: Mining and Gold Stocks Lead the Charge

 A Positive Start to the Week

After a four-day losing streak, Australian shares rebounded on Monday, with the S&P/ASX 200 index (XJO) rising 0.2% to 7,962.3. This recovery helped the index stabilize after hitting a six-month low on Friday. However, despite the slight uptick, the ASX 200 remains nearly 7% below its record high from February 14.

The turnaround was primarily driven by strong performances in gold and mining stocks, which benefited from rising commodity prices. Meanwhile, financial stocks continued to struggle, extending their decline from the previous week.

Market Drivers: Gold and Mining Stocks Boost ASX

The Australian stock market endured significant losses last week, mainly due to global trade tensions and economic uncertainty. However, the latest recovery signals renewed investor confidence, particularly in the commodities sector.

Mining Sector Performance

The mining index (XMM) climbed 0.9%, fueled by higher commodity prices and strong demand expectations. Major players saw notable gains:

• BHP Group (BHP) advanced 0.6%
• Rio Tinto (RIO) jumped 3.1%

The surge in mining stocks was partly due to expectations of potential stimulus measures in China, which could boost demand for key Australian exports like iron ore and copper.

Gold Stocks Benefit from Rising Bullion Prices

Gold prices continued their upward trajectory, prompting a 1.4% increase in the gold index (XGD). Investors turned to gold as a safe-haven asset, hedging against economic uncertainty and a weaker U.S. dollar. The rally in gold stocks included:

• Newcrest Mining (NCM) gaining 2.2%
• Northern Star Resources (NST) up 1.8%

With ongoing geopolitical risks and market volatility, gold stocks are expected to remain resilient in the near term.

Energy Stocks Show Strength

Energy stocks also posted gains, with the energy index (XEJ) surging 1.5%. Higher oil and gas prices supported the sector, driving up shares of major energy companies:

• Woodside Energy (WDS) rose 1.3%
• Santos Ltd (STO) climbed 1.6%

Financial Sector Struggles Amid Valuation Concerns

While mining and energy stocks lifted the overall market, financial stocks remained under pressure, extending their recent losses. The sector fell 0.1% on Monday, reflecting ongoing concerns about stretched valuations and economic uncertainty.

Banking Stocks Underperform

• Commonwealth Bank of Australia (CBA) declined 0.2%
• ANZ Group (ANZ) dropped 0.6%

Last week, the financial sector saw a collective decline of over 4%, and analysts have cautioned that the downward trend could continue. Junvum Kim, senior sales trader at Saxo Markets, noted, “Big four banks may see additional pressure following Friday’s sell-off, as investors reassess valuations amid tightening credit conditions.”

China’s Economic Signals and ASX Outlook

The broader market remains influenced by economic developments in China, a key trading partner for Australia.

Deflationary Pressures in China

Recent data revealed continued deflationary pressures in China, raising concerns about its impact on Australian exports. However, expectations of stimulus measures from Beijing provided some relief, helping iron ore futures post modest gains.

Technical Analysis: Support and Resistance Levels

Market analysts suggest that if the ASX 200 experiences further declines, it may find support at 7,800, a critical level for potential stabilization. Henry Jennings, portfolio manager at Marcustoday Financial Newsletter, stated, “If support holds, we may see a technical bounce in the coming sessions, but macroeconomic factors remain the key driver.”

New Zealand Market: Fonterra Leads Gains

Across the Tasman, the New Zealand benchmark S&P/NZX 50 index (NZ50G) rose 0.9% to 12,515.87.

Fonterra’s Strong Performance

Fonterra (FCG), one of New Zealand’s largest dairy companies, saw its stock surge 3.6% after forecasting higher annual earnings. The positive outlook was driven by strong volume growth and improved margins in its consumer division.

Key Market Themes to Watch

Investors are closely monitoring multiple factors that could shape market sentiment in the coming weeks:

1. Global Trade Uncertainties – Ongoing tensions could impact export-driven sectors.
2. Commodity Price Trends – Higher demand for iron ore, gold, and energy could provide market support.
3. China’s Economic Policy Moves – Any stimulus measures will have ripple effects on Australian stocks.
4. Banking Sector Valuations – Continued pressure on financial stocks could weigh on overall market performance.
5. Inflation and Interest Rate Outlook – Monetary policy decisions will influence equity market trends.