Miners drive modest gain for ASX, banks slump; Insignia agrees to $3.3b takeover

Welcome to your five-minute recap of the trading day.

The numbers

The S&P/ASX 200 closed a touch higher on Tuesday, gaining 9 points, or 0.1 per cent, to 8677.2, with miners shining after a rise in iron ore prices overnight. Six of 11 industry sectors finished in positive territory, led by healthcare and materials. The broader All Ordinaries gained 15.3 points, or 0.2 per cent, to 8941.5.

Wall Street has made a solid start to the week. Credit: Bloomberg

Over the past five days, the index has gained 0.5 per cent and is 1.1 per cent off of its 52-week high.

The Australian dollar was buying US65.14¢, from US65.17¢ about 5pm on Monday.

The lifters

Mining shares jumped, bolstered by a 3 per cent rise in iron ore prices overnight. Rio Tinto was up 3.4 per cent, Fortescue bounced 3.3 per cent, and BHP increased 2.6 per cent.

Insignia, the owner of MLC Asset Management, was the day’s standout, surging 12.5 per cent after it agreed to a $3.3 billion takeover from private equity firm CC Capital, which is buying the business at a significant premium.

Insignia, formerly known as IOOF, said it agreed to the deal at $4.80 a share, which is a premium of more than 50 per cent to its share price before rival firm Bain made a bid for Insignia last year. Bain withdrew its bid for Insignia earlier this year. Insignia shares jumped 12.6 per cent in early trade.

“The decision to recommend this offer follows extensive work by the board and its advisers to understand the medium- to long-term value of the company, with the board concluding that the offer should be put to shareholders for their consideration,” Insignia chairman Allan Griffiths said.

Healthcare climbed 2.1 per cent, with CSL up 3.4 per cent and Pro Medicus 2.1 per cent higher. Resmed and Sigma increased 1.1 per cent and 0.7 per cent, respectively.

Goldminers also did well as the yellow metal traded for a one-month high of just over $US3400 an ounce. Newmont and Evolution advanced 2.8 per cent and Emerald Resources added 4.9 per cent. West African Resources climbed 8.6 per cent.

The laggards

The big banks led a retreat for financials. Commonwealth Bank – the largest stock on the ASX – slumped 3.1 per cent, NAB shed 2.7 per cent, Westpac lost 1.3 per cent, and ANZ Bank lost 0.8 per cent.

CBA shares are down. Credit: Oscar Colman

Liontown Resources was the session’s biggest loser, dropping 5.8 per cent.

Consumer stocks were mixed, with the sectors weaker overall. Lovisa was one of the day’s worst performers, losing 3.8 per cent. Wesfarmers was down 0.8 per cent, and Woolworths edged 0.3 per cent lower. Coles gained 0.3 per cent.

The lowdown

The local sharemarket has moved modestly higher as rotation continues from Australia’s expensive banks to its major miners. The ASX’s financial sector was the worst performing, down 1.7 per cent, while the materials/mining sector was the best performing, up 2.4 per cent.

Traders were digesting minutes from the Reserve Bank’s July 7-8 meeting, in which the central bank surprised observers by leaving interest rates on hold rather than trimming them.

The minutes said most board members felt cutting rates for a third time in the space of four meetings “would be unlikely to be consistent with the strategy of easing monetary policy in a cautious and gradual manner to achieve the board’s inflation and full employment objectives”.

The minutes revealed the central bank remained concerned about inflation, which triggered the decision to hold.

Market participants were also pondering the reason for Monday’s 1 per cent pullback, which followed a 1.4 per cent rally on Friday that had left the index at its highest level ever.

RBA governor Michele Bullock explained the 6-3 split in the bank’s decision.Credit: Dominic Lorrimer

Monday’s heavy sell-off following Friday’s all-time high mirrored a pattern that had occurred around half a dozen times last year, IG analyst Tony Sycamore said.

“While I find this pattern intriguing, I am still struggling to explain the rationale behind it,” he wrote.

In the absence of a better theory, it is possible Monday’s pullback was profit-taking ahead of the August earnings season that is likely to highlight stretched valuations in certain sectors, particularly the banks, Sycamore said.

“There has been noticeable rotation from out of the banks into the big mining stocks, really, since the start of this new financial year,” he said.

“And that seems to be gathering a little bit of pace as well.”

Investors might also be following the lead of Warren Buffett, who had been liquidating his bank holdings, Sycamore said.

Traders are also keeping a close eye on tariff headlines. Stocks have surged from their slump in April as fund managers lean harder into the rally in risk assets, with US stocks pushing to fresh highs, defying persistent trade and geopolitical tensions.

The high-octane wager is that while US President Donald Trump is threatening to disrupt the economic order anew, he will step back from the brink. That rally faces a key test this week as megacaps such as Tesla and Alphabet report earnings.

“Earnings season will move into full swing this week, and the guidance will be more important than usual,” said Matt Maley, chief market strategist at Miller Tabak. “This guidance is going to have to create a very large increase in earnings estimates if the market is going to reach some of the targets that exist on Wall Street right now.”

Investors were also weighing the outlook for the Federal Reserve’s interest-rate path ahead of next week’s policy decision. Officials have recently expressed differing views on how Trump’s tariff agenda will impact inflation, with Fed governor Christopher Waller advocating for a rate cut even as most of his colleagues remain more cautious.

Swaps markets show virtually zero possibility of a cut to Fed rates next week. For the rest of the year, traders are betting the Fed will lower by a total of 46 basis points, a level that’s little changed from Friday.

Overnight, US stock indexes inched their way to more records to kick off a week full of profit updates from big US companies.

The S&P 500 rose 0.1 per cent and squeaked past its prior all-time high set on Thursday. The Dow Jones edged down by 19 points, or less than 0.1 per cent, and the Nasdaq composite added 0.4 per cent to its own record.

In the bond market, Treasury yields eased. The yield on the 10-year Treasury fell to 4.38 per cent from 4.44 per cent late Friday.

With AP

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