The COB: Pessimistic Positioning

Why It Matters

A tougher RBA stance and stronger commodity demand could reshape Australian portfolio allocations, rewarding inflation‑linked stocks and penalising rate‑sensitive equities.

Key Takeaways

• ASX 200 slipped 0.6% to three‑week low ahead of CPI.
• Energy sector outperformed; lithium stocks surged on global demand rebound.
• RBA likely to hike rates multiple times after March CPI data.
• Gold and utilities weakened as market adopts pessimistic positioning.
• US earnings season and Middle East tensions add volatility to equities.

Summary

The COB broadcast focused on today’s Australian market slide and the looming inflation data that could shape central‑bank policy across the region.

The S&P/ASX 200 closed 0.6 % lower at 8,710, a three‑week trough, while the energy index gained roughly 0.7 % as oil prices hovered near US$110. Lithium‑related stocks led the rally, with the US‑listed LYLT ETF tripling over the past year and Liontown Resources up 4.4 %. By contrast, gold miners and utilities fell, and gold futures slipped amid tentative US‑Iran talks.

Martin Crab of Shaw & Partners labelled the day ‘Lithium Day’, noting UBS’s upgraded price deck for spodumene. RBA strategist Paul Bloxham warned the trim‑mean CPI could trigger several more rate hikes, potentially pushing the cash rate above 4.5 %. Dominos’ Australian shares plunged 10.5 % after a weak US earnings update, while Reliance Worldwide rallied 4.5 % on reaffirmed guidance.

The mix of weak equity breadth, rising commodity prices and possible aggressive monetary tightening suggests investors may shift toward inflation‑hedged assets such as energy and lithium, while remaining cautious on rate‑sensitive sectors like consumer discretionary and construction.

Original Description

Earnings momentum out of the States failed to translate to the local market this Tuesday, as rising oil prices and geopolitical tension soured investor sentiment. The S&P/ASX200 fell 0.64% to close the session down at 8,710.70 points.

Brent crude rose as US President Trump noted he was not happy with Iran’s latest proposal to end the war.

Although, headlines were dominated by the Bank of Japan’s decision to keep interest rates on hold - kicking off the week ahead for central bank decisions.

Locally, Reliance Worldwide reaffirmed its 2026 fiscal year earnings outlook and kept 2027 estimates unchanged, surging 4.5% against a largely negative market.

Elsewhere, Whitehaven Coal posted gains of 4.5% despite reporting a 14% decline in production for the quarter. The coal producer said it remains on track to meet full year guidance with sales tending towards the upper end of expectations.

Meanwhile, Domino's Pizza Enterprises shares fell on the Australian market, tracking weakness in its US-listed counterpart after softer annual growth, with the stock down 10.5%.

In the smaller end of town, European Lithium has agreed to merge with Critical Metals, with shareholders receiving 0.035 Critical Metals shares per EUR share.The Australian minerals explorer was boosted 47.4% over the day's trade.

Tonight, US consumer confidence data is released as markets prepare for the inflation read locally tomorrow.