The Australian sharemarket rebounded on Tuesday, recovering from a significant downturn that had marked the start of the week. After experiencing its worst day in four years, the S&P/ASX 200 index closed up 31 points, or 0.41%, at 7,680.6.
Monday’s trading session saw the Australian market hit hard, mirroring a steep decline in Japanese markets. Despite this rocky start, Tuesday brought a sense of stability, with seven out of the eleven sectors on the ASX posting gains. The real estate sector led the way with an increase of nearly one percent, while financials and industrials contributed to the overall positive trend. Notably, exchange-traded funds linked to the Nasdaq 100, global semiconductors, and cryptocurrency experienced impressive double-digit gains.
Josh Gilbert, a market analyst at eToro, acknowledged the cautious optimism as sentiment began to stabilise. “After one of the worst days in global markets since the pandemic, it’s fair to say investors are going to feel uneasy,” Gilbert remarked. He noted that, despite Monday’s tumultuous trading, the overall market trend appeared to be a temporary blip when viewed over a five-year period. “Pullbacks are uncomfortable for investors, but they happen and are simply the price of entry into the stock market,” he added, highlighting the importance of strategies like dollar-cost averaging.
The discretionary sector emerged as a standout performer following the Reserve Bank of Australia’s decision to hold the cash rate steady. Notable gains included Wesfarmers, which rose by 2.27%, and gambling machine manufacturer Aristocrat Leisure, up 2.53%. Other household names like Breville, JB Hi-Fi, and Harvey Norman all saw increases of over one percent.
In the industrial sector, Qantas experienced a 1.56% gain, closing at $5.87, despite facing scrutiny over “slot hoarding” at Sydney Airport. Meanwhile, engineering consultants Lycopodium saw its stock climb 2.9% to finish at $13.23, marking a 40% increase over the year.
However, not all sectors enjoyed a positive day. The energy sector faced challenges, falling by 1.99%. Woodside Energy experienced a significant loss of five percent, closing at $25.12, following the announcement of a $3.7 billion acquisition of a gas-based ammonia project on the US Gulf Coast. Analysts expressed concerns that shareholder returns may be taking a backseat to reinvestment strategies. Woodside’s stock has plummeted by 34% over the past year, despite recent deals, including a $900 million agreement last month for another venture in the US Gulf.
On a brighter note, Paladin Energy, Deep Yellow, and Cooper Energy all saw gains of over three percent, while uranium developer Bannerman Energy surged by an impressive 7.3% to reach $2.48.
Overall, 100 of the ASX 200 equities moved upwards on Tuesday, with only 16 remaining flat. The market’s resilience amid global uncertainties, particularly in US tech stocks, signalled a cautious but hopeful outlook for Australian investors. Following substantial losses on Wall Street, including a 6.3% drop for Nvidia and significant declines for other tech giants like Microsoft, Apple, and Amazon, the Australian market’s steadiness provides a glimmer of optimism.
