Source: Krish Capital Pty Ltd

Index Update: The Australian share market edged lower on Monday, with the S&P/ASX 200 falling 6.00 points, or 0.07%, to close at 8,981.40. Over the past five sessions, the index has gained 2.20% and remains 0.81% below its 52-week high. The market initially rallied and briefly surpassed the 21 August record closing high of 9,019.1 but was unable to sustain momentum in a subdued session, with parts of the country observing a public holiday in New South Wales.

Gains in the materials sector, driven by gold and copper miners, helped offset losses in other areas of the market. Materials rose 0.62% on the day and has advanced 3.22% over the past week. In contrast, the technology sector led the decline. Overall, six of the 11 sectors finished in negative territory.

Macro Update: Gold prices surged to a new record on Monday, breaking the USD 3,900-an-ounce threshold for the first time. This significant jump was primarily fuelled by safe-haven demand, as investors reacted to two major global events: a steep drop in the Japanese yen and the ongoing U.S. government shutdown. Additional support for the precious metal came from increasing market anticipation of further Federal Reserve interest rate cuts. Gold's performance has been exceptional, climbing 49% so far this year, building on a 27% increase in 2024.

The yen experienced its largest fall against the dollar in five months following the election of Sanae Takaichi as the new leader of the ruling party and the presumptive prime minister.

Top Market Movers: Droneshield Limited (ASX: DRO) led the gains, jumping 10.74% to close at AUD 6.29. Lynas Rare Earths Ltd (ASX: LYC) followed with a 7.20% increase to AUD 19.36, while Iluka Resources Ltd (ASX: ILU) rose 4.65% to AUD 7.43. On the downside, Mesoblast Ltd (ASX: MSB) recorded the largest decline, falling 6.16% to AUD 2.59. HMC Capital Ltd (ASX: HMC) dropped 5.36% to AUD 3.18, and Treasury Wine Estates Ltd (ASX: TWE) fell 4.11% to AUD 6.77.

Commodity Update: The yen slumped sharply against the U.S. dollar, marking its biggest drop in five months after Sanae Takaichi’s LDP leadership victory signalled a tilt toward expansionary fiscal policy, challenging the Bank of Japan. Gold rose 0.95% to USD 3,946.10, silver gained 0.42% to USD 48.16, and copper edged up 0.26% to USD 10,740.90. Brent crude climbed 1.01% to USD 65.16 as OPEC+ opted for a smaller-than-expected output increase.

Our Stance: The Australian share market closed marginally lower on Monday, with the S&P/ASX 200 edging down 0.07% to 8,981.40, as gains in the materials sector were insufficient to overcome broader market declines, especially in technology. The index initially pushed past its August record high but could not sustain momentum, with a public holiday in New South Wales contributing to a subdued session. On the macro front, gold prices surged to a new record, breaking the USD 3,900-an-ounce level, driven by intense safe-haven demand sparked by the U.S. government shutdown and a sharp drop in the Japanese yen. The yen slumped by its largest margin in five months after Sanae Takaichi's election victory signalled a pivot toward expansionary fiscal policy. Overall, while the domestic market showed resilience (gaining 2.20% over the last five sessions), investors remain keenly focused on the escalating global macro risks, particularly the Fed's rate path and the implications of the political shifts impacting the yen.

The S&P/ASX 200 Index declined by 8,981.40 points in its latest session, forming a bearish candlestick pattern accompanied by increased trading volume. This combination indicates short-term caution among investors and reflects a prevailing bearish bias. Despite the recent pullback, the index continues to trade above its 21-period Simple Moving Average (SMA), which now acts as an immediate support zone. On the daily chart, a key support level is identified around 8,900.50. Holding above this threshold could help consolidate recent gains and restore confidence in the broader uptrend. From a weekly perspective, the index remains positioned above the 21-period SMA, a constructive technical signal that suggests the potential for sustained momentum over the longer term, provided near-term support levels hold firm.