ASX closes flat as Lynas, MinRes shine, CBA holds strong above $180

The Australian sharemarket ran out of steam after a bright start to dip into negative territory as investors took a breather in a muted session.

The S&P/ASX200 opened higher but steadily relinquished its gains to close 2.9 points weaker at 8538.9 points, with seven of 11 industry sectors in the green.

Wall Street’s recent rally lost some momentum following a pair of potentially discouraging reports.Credit: Bloomberg

Despite the subdued close to Thursday’s session, the benchmark index is still within striking distance of its all-time high of 8555.8 points, struck on February 14, 2025.

Oil prices slid lower overnight, leading to falls for energy giants Santos (down 0.8 per cent) and Woodside Energy (down 0.4 per cent). The big four banks were mixed, with Westpac adding 0.5 per cent, ANZ Bank closing flat and National Australia Bank retreating 0.3 per cent.

Commonwealth Bank closed 0.1 per cent higher, with the stock still trading at over $181 a share, despite investors taking some profits early in the session. The bank currently boasts a market valuation of over $300 billion.

Rare earths miner Lynas had a stellar session and surged 12.5 per cent after automakers in the US and Europe raised concerns about China’s export controls, as Beijing’s move threatens to disrupt global car production. Lithium miner MinRes also tapped into investor enthusiasm, rising 14.8 per cent, while Liontown Resources picked up 5.8 per cent.

Fortescue led the way for the big three miners with a 1.5 per cent gain, while BHP added 0.1 per cent and Rio Tinto added 0.3 per cent.

The Australian dollar remains in bullish mood, fetching US64.96¢ after weak US manufacturing and jobs data pushed the greenback lower.

Payments technology provider Tyro was a notable loser during the session, slipping 10.4 per cent after telling the market it had lost its chief executive Jon Davey, who has accepted a job at an undisclosed private equity-backed business.

On Wall Street, the S&P 500 finished the day virtually unchanged, remaining 2.8 per cent below its all-time high. The Dow Jones fell 91 points, or 0.2 per cent, and the Nasdaq composite added 0.3 per cent.

However, the local market shrugged off the mixed Wall Street session, as weak US jobs and manufacturing data indicated Trump administration trade policy was weighing on an already slowing US economy, Capital.com market analyst Kyle Rodda said.

“Although investor sentiment remains robust, largely because of confidence – misplaced or otherwise – about progress in US trade negotiations and strong tech results, the spectre of a slowdown in growth continues to feed niggling fears that the equity market has gotten too far ahead of itself,” he said.

The action was strong in the bond market on Wednesday, where Treasury yields tumbled following the weaker-than-expected economic updates.

One update said that activity contracted for US retailers, finance companies and other businesses in the services industries last month, when economists were expecting to see growth. Businesses told the Institute for Supply Management in its survey that all the uncertainty created by tariffs is making it difficult for them to forecast and plan.

A second report from payroll systems provider ADP suggested US employers outside the government hired far fewer workers last month than economists expected. That could bode ill for Friday’s more comprehensive jobs report coming from the US Labour Department, which is one of Wall Street’s most anticipated data releases each month.

So far, the US job market has remained remarkably resilient despite years of high inflation and now the threat of President Donald Trump’s high tariffs. But weakness there could undermine the rest of the economy.

To be sure, ADP’s report historically has not been a perfect predictor of what the US Labour Department’s report will say.

“Whether this report is accurate or not, traders and investors will read today’s number as a dark result for trading today,” according to Carl Weinberg, chief economist at High Frequency Economics. “This may be the tip of an iceberg, but it also could be a false start.”

Following the reports, traders built up bets that the Federal Reserve will need to cut interest rates later this year in order to prop up the economy, which in turn caused the fall for Treasury yields. The weaker-than-expected ADP report also pushed Trump to call on Fed Chair Jerome Powell to deliver cuts to rates more quickly.

“‘Too Late’ Powell must now LOWER THE RATE,” Trump said on his Truth Social platform. “He is unbelievable!!!”

The Fed has yet to cut interest rates this year after slashing them through the end of 2024. Part of the reason for the pause is that the Fed wants to see how much Trump’s tariffs will hurt the economy and raise inflation. While lower interest rates could boost the economy, they could also give inflation more fuel.

Longer-term Treasury yields have also been rising in recent weeks due to reasons outside the Fed’s control. Investors have been demanding the US government pay more in interest to borrow because of worries about whether it’s set to add trillions of dollars to its debt through tax cuts under discussion on Capitol Hill.

With AAP, AP and Bloomberg

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