Index Update: The Australian sharemarket closed slightly lower on Monday, with the S&P/ASX 200 shedding 12.60 points, or 0.14%, to close at 8,816.10 as investors weighed signs of progress in US-Iran peace talks against caution ahead of key inflation data due later this week. The benchmark index has declined 1.10% over the past five sessions and remains 4.20% below its 52-week high. Sector performance was mixed, with six of the 11 sectors ending lower. Information Technology led losses with a 4.20% drop, while Consumer Discretionary was the strongest performer, rising 0.56% and extending its five-day gain to 0.94%.

Macro Update: Australian business profitability weakened in the 2024-25 financial year, with total operating profit before tax (OPBT) across selected industries falling by AUD 12.2 billion, or 1.9%, according to the Australian Bureau of Statistics (ABS). The decline was largely driven by the Mining sector, where profits dropped AUD 32.9 billion, or 19.1%, amid softer conditions. Excluding mining, operating profits rose AUD 20.6 billion, or 4.4%, highlighting mixed conditions across the economy. Strong gains were recorded in Rental, Hiring and Real Estate Services, where profits jumped AUD 20.2 billion (47.6%), while private Health Care and Social Assistance and Construction sectors posted increases of AUD 6.0 billion (15.9%) and AUD 5.2 billion (9.0%), respectively. Overall EBITDA across selected industries declined AUD 17.2 billion, or 2.2%, with the ABS noting that 14 industries recorded profit growth while five sectors experienced declines.

Top Market Movers: Among the top gainers on the ASX, Ora Banda Mining (ASX:OBM) climbed 6.58% to AUD 1.295, followed by Minerals 260 (ASX:MI6), which advanced 5.91% to AUD 0.985. Fletcher Building (ASX:FBU) also posted strong gains, rising 4.89% to AUD 2.790. On the downside, WiseTech Global (ASX:WTC) was the biggest loser, plunging 18.44% to AUD 30.080. TUAS (ASX:TUA) fell 7.42% to AUD 2.370, while PLS Group (ASX:PLS) declined 5.95% to AUD 5.530.

Commodity Update: Commodity Update: The U.S. Dollar Index remained near a one-year high on Monday as investors assessed ongoing geopolitical developments and trade disruptions. Shipping activity through the Strait of Hormuz continued to face delays, while initial talks between U.S. and Iranian officials under an interim peace arrangement encountered difficulties. Gold rose 0.80% to USD 4,206.20 per ounce, silver advanced 1.28% to USD 65.73 per ounce, and copper gained 0.41% to USD 13,654.00 per tonne. Brent crude oil increased 0.67% to USD 81.11 per barrel amid continued tensions surrounding U.S.-Iran relations.

Our Stance: The Australian sharemarket edged lower on Monday, with the S&P/ASX 200 slipping 0.14% to 8,816.10 as investors balanced easing geopolitical tensions between the US and Iran with caution ahead of key inflation data. While Information Technology dragged the market lower, gains in Consumer Discretionary helped limit losses. Macro data from the ABS showed overall business profitability fell 1.9% in 2024-25, weighed down by a sharp decline in mining profits, although most industries recorded profit growth. Among stocks, Ora Banda Mining (ASX:OBM) and Minerals 260 (ASX: MI6) led gains, while WiseTech Global (ASX:WTC) slumped sharply. Firmer gold and oil prices provided support to commodities, but near-term sentiment may remain cautious as investors await inflation readings and further geopolitical developments.

The S&P/ASX 200 retreated by 12.60 points in the latest trading session, forming a bearish candlestick pattern that points to some moderation in short-term market sentiment. Despite this pullback, the broader technical outlook remains positive, with the index continuing to trade above its 21-day Simple Moving Average (SMA), which remains an important dynamic support level and reinforces the prevailing uptrend. Key support is situated around 8,730.60, and maintaining levels above this area would help preserve the current bullish structure. A successful defence of support could encourage renewed buying interest and provide the foundation for further gains. Conversely, a decisive break below the support zone may weaken market sentiment, increase selling pressure, and raise the likelihood of a deeper short-term correction.