ASX closes in the green as banks rally, gold miners slump

The Australian sharemarket gained on Monday after a rally in banking and property shares offset weakness in the mining sector, as investors took a negative view on commodity stocks, especially gold miners.

The S&P/ASX 200 closed 36.6 points or 0.4 per cent higher at 9031.90, helped by a strong day for the banking sector. The market’s rise comes after the local bourse ended last week in the red, even after bets on interest rate cuts took it to a fresh record on Thursday.

The Australian dollar was trading at US65.02¢ at 5.15pm AEDT.

After their run-up in recent weeks, mining stocks traded in the red. The nation’s biggest miners – BHP (down 1 per cent), Fortescue Metals (down 0.1 per cent) and Rio Tinto (down 0.1 per cent) – all closed lower.

Gold miners suffered bigger losses in a selldown after their recent rally. Northern Star Resources, Evolution Mining and Newmont were down 3.6 per cent, 4.9 per cent and 5.7 per cent, respectively, as the gold spot price eased to $US4259 ($6548) an ounce from nearly $US4380.

Rare earths producers were mixed. Lynas climbed another 6.6 per cent, while Iluka slumped 6.7 per cent ahead of a scheduled meeting between Prime Minister Anthony Albanese and US President Donald Trump, whose talks are expected to include discussions over the supply chain of rare earth materials. The Trump administration’s interest in critical mineral resources has fuelled speculation that the US government may take stakes in Australian miners as part of a broader strategic relationship.

Uranium miner Deep Yellow dived 18.8 per cent after saying its chief executive John Borshoff had stepped down with immediate effect. Its finance chief will take the helm until a successor is found.

The losses in the mining sector contrasted with the broader market, where there were gains across the board.

The big four banks were all higher, led by market giant Commonwealth Bank, which jumped 2.6 per cent. Westpac (up 1.4 per cent), National Australia Bank (up 1 per cent) and ANZ Bank (up 0.4 per cent) also gained.

Zip Co rose 4.3 per cent after the buy now, pay later business beat market expectations with its latest numbers, which showed its first-quarter earnings had soared by 98 per cent to $62.8 million thanks to much higher revenue in the critical US market, where transactions had grown by more than half from the same quarter last year.

Property stocks were boosted by gains in warehouse and data centre owner Goodman Group (up 0.7 per cent) and shopping centre owner Stockland (up 1.7 per cent), Scentre (up 1.5 per cent) and Vicinity (up 2 per cent). Tech stocks were also higher, helped by a 0.9 per cent gain for WiseTech and a 1.2 per cent rise in Life 360 shares.

Counter-drone company DroneShield fell 2.6 per cent after reporting its third-quarter sales had increased by more than 1000 per cent to $92.9 million. The war in Ukraine “has irreversibly brought drones and counter-drone solutions into [the] mainstream of conflicts”, it told investors.

Car parts retailer Bapcor, which owns the Autobarn chain, plunged 17.7 per cent after it issued a profit warning, citing “unsatisfactory operational practices requiring immediate attention”.

On Wall Street on Friday, a jittery week for US stocks ended on a positive note as the White House soothed anxiety around trade tensions while regional banks rebounded. The S&P 500 rose 0.5 per cent, as did the Dow Jones Industrial Average and the Nasdaq composite. Bonds, gold and silver fell.

Indexes had careened through several jarring swings over the week as worries built about the financial health of America’s small and midsized banks, as well as the souring trade relationship between the US and China.

However, Friday’s bounce sent the S&P 500 to its best week since August, as Trump expressed optimism that talks with Chinese officials could yield an agreement to defuse the tariff spat between the world’s two biggest economies. A batch of solid results from various regional lenders lifted the banking industry after a rout triggered by concern over credit quality in the economy.

“October has brought a spooky uptick in market swings,” said Keith Lerner at Truist Advisory Services. “After an extended rally and elevated investor sentiment, markets were vulnerable to negative surprises. We would view deeper pullbacks as opportunities to lean in.”

The White House signalled efforts to calm fears of a full-blown trade war that could have a seismic effect on the global economy. “I think we’re doing very well. I think we’re getting along with China,” Trump said. He also indicated that he believed his planned meeting with President Xi Jinping this month would go ahead.

US bank stocks, meanwhile, stabilised on Friday after several reported stronger profit for the latest quarter than analysts had expected. That helped steady the group, a day after it tumbled on worries about potentially bad loans. Scrutiny is rising on the quality of loans that banks and other lenders have broadly made following last month’s Chapter 11 bankruptcy protection filing of First Brands Group, a supplier of aftermarket auto parts.

with AP, AAP and Bloomberg

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.