ASX 200 Morning Outlook: Commodities Bounce Helps Materials Lead Gains

The ASX 200 followed Wall Street’s mild risk-on lead, gaining 0.3% as commodities rebounded and Materials led the advance. Energy stocks also firmed, while Financials and Tech lagged as traders weighed inflation pressures against sector rotation prospects.

View related analysis:

Commodities Rebound Lifts Materials and Energy Sectors

ASX 200 Market Snapshot

The mild risk-on bounce enjoyed by Wall Street on Wednesday was mirrored by the ASX 200 on Thursday, with the index rising a modest 0.3%.
Seven of the eleven ASX 200 sectors advanced, led by Materials (XMJ) and Energy (XEJ), while Consumer Discretionary (XDJ) and Information Technology (XIJ) lagged.
Daily trading volume hovered around its 20-day average for a second session and marked a four-day high.
However, the rebound was not convincing enough to declare a cycle low in the correction from record highs. A break below the September low at 8738.8 would confirm a potential resumption of the broader bearish move.

Chart analysis by Matt Simpson - source: ASX, LSEG

Commodities Bounce Supports ASX Gold, Resources, Metals and Mining Sectors

A slight lift in risk appetite on Wednesday supported commodities, with gold, silver, copper, and crude oil all posting modest gains.

This helped the ASX All Ordinaries Gold Index (XGD) snap a three-day losing streak and rebound from its 50-day average. With a potential double bottom forming around 15,000, gold stocks may have further upside potential near term.

The ASX Metals & Mining Index (XMM) also bounced from its 50-day EMA after its daily RSI (2) hit its most oversold level since September 10. Given its underlying bullish structure, the sector may be near a corrective low.

The ASX 200 Resources Index (XJR) shows a similar rebound pattern. With tech and consumer discretionary sectors underperforming amid hotter-than-expected Australian inflation, commodities could continue to lead as part of a reflation-driven rotation within the ASX 200.

Chart analysis by Matt Simpson - source: ASX, LSEG

ASX 200 Correlations

While the Financials and Materials sectors account for roughly half of the ASX 200’s market capitalisation, their correlations with the broader index have diverged sharply. Financials currently show little to no correlation — even turning inversely related over the past 10 days — whereas Materials continue to track (and possibly drive) the index across the 10-, 20-, and 60-day periods.

Risk sentiment is also evident, with the ASX 200 maintaining positive correlations with Wall Street benchmarks (S&P 500, Nasdaq 100) and AUD/USD, underscoring the global risk-on dynamic influencing Australian equities.

Chart analysis by Matt Simpson - source: ASX, LSEG

View the full economic calendar

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

FOREX.com is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment and CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.forex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.forex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 42.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.

Delayed London Stock Exchange (LSE) Data

The London Stock Exchange (LSE) market data displayed or referenced on this website is provided on a delayed basis and is not in real time. The delay period may vary but is typically at least 15 minutes. This data is intended for information purposes only and should not be relied upon for trading, investment, or other financial decisions. We do not guarantee the completeness, reliability, or suitability of the data for any particular purpose. Users should consult real-time data sources and obtain professional advice before making any financial decisions.