ASX 200 Extends losses as Materials drag

Image Source : Krish Capital Pty Ltd

Index Update: The Australian share market ended lower on Wednesday as renewed geopolitical tensions added to global uncertainty. Market sentiment was impacted by developments at the G7 summit and cautious commentary on international relations, leading to broader declines across global equities and fluctuation in oil prices. The S&P/ASX 200 slipped 0.12% to close at 8,531.20, down 0.71% over the past five days and 1.25% below its 52-week high. Despite the index’s decline, eight of 11 sectors posted gains, with Information Technology emerging as the top performer, advancing 1.23% for the day and 1.77% over five sessions. Materials was the worst performer in the market today, declining 1.57%.

Macro Update: Oil prices eased in Asian trade on Wednesday, pulling back from a 4% gain in the previous session, as investors balanced fears of supply disruptions due to the escalating Iran-Israel conflict against concerns that a potential U.S. Federal Reserve rate hike could dampen demand. Tensions remain high, with the U.S. boosting military presence in the region and fears growing over security in the Strait of Hormuz, a vital oil shipping route.

Top Market Movers: On Wednesday, Viva Energy Group (ASX:VEA) led gains in the ASX 200 index, rising 5.34% to AUD 2.17, followed by Boss Energy (ASX:BOE), up 4.25% at AUD 4.66, and Deep Yellow (ASX:DYL), which climbed 3.92% to AUD 1.73. On the downside, Lovisa Holdings (ASX:LOV) fell 5.27% to AUD 30.57, Spartan Resources (ASX:SPR) dropped 4.63% to AUD 2.06, and Mineral Resources (ASX:MIN) slipped 4.60% to AUD 22.59.

Commodity Update: The U.S. dollar remained firm against major currencies on Wednesday, supported by safe-haven demand amid rising tensions between Israel and Iran. Investors remained cautious ahead of the Federal Reserve's interest rate decision. Meanwhile, gold edged down 0.15% to USD 3,401.45, silver rose 0.09% to USD 37.24, and copper gained 0.16% to USD 9,693.55. Brent crude climbed 0.25% to USD 76.64, extending gains on supply concerns from the Middle East conflict.

Our Stance: The Australian market’s modest decline reflects a broader pattern of investor caution amid escalating geopolitical tensions and macroeconomic uncertainty. While the S&P/ASX 200 slipped slightly, sectoral resilience, especially in Information Technology, indicates underlying market strength. With oil prices reacting to Middle East risks and rate hike concerns, near-term volatility might be there. However, performances from energy and uranium stocks like Viva Energy (ASX:VEA) and Boss Energy (ASX:BOE) suggest selective opportunities are there in the market despite the broader weakness in the market. 

The S&P/ASX 200 index experienced a challenging trading session, slipping 10.10 points and forming a small bearish candlestick pattern. Despite the setback, the index continues to trade above its 50-period Simple Moving Average (SMA), which now serves as a critical support level. On the daily chart, key support is identified near 8,468.55 an important level for market participants to watch. Holding above this threshold would help reinforce recent gains and strengthen confidence in the index’s upward trajectory. Furthermore, the index’s position above the 21-period SMA on the weekly chart signals the potential for sustained momentum over the longer term. This alignment of technical indicators across multiple timeframes supports a bullish outlook and suggests the index may remain resilient amid market fluctuations.