Australian shares endured a volatile week but ultimately finished higher, as investors balanced easing headline inflation, shifting Middle East tensions, and falling oil prices into Friday, and continued strength across selected materials, industrials and technology names.
The S&P/ASX 200 finished the week 0.9% higher, despite a sharp sell-off on Thursday, with Friday’s rebound helping the benchmark recover to 8,731.7 points. The market also posted a second consecutive monthly gain, rising 0.8% in May, supported by improved risk appetite after reports suggested the US and Iran had reached a tentative 60-day ceasefire extension to allow further nuclear negotiations.
The week was dominated by rapid changes in sentiment. Early optimism around a potential reopening of the Strait of Hormuz helped support mining and materials stocks before renewed US military strikes near Iranian-linked assets reignited fears of higher oil prices and sticky inflation. Those fears weighed heavily on banks, property stocks, and rate-sensitive growth names through Tuesday and Thursday.
The key domestic turning point came on Wednesday, when Australia’s April monthly CPI slowed to 4.2% year-on-year, below expectations of 4.4% and down from 4.6% in March. That triggered a sharp relief rally across banks, technology and industrials, as markets reduced expectations of an immediate June RBA rate hike. However, the broader inflation picture remains complicated, with trimmed mean inflation still elevated at 3.4%, keeping the RBA firmly in a higher-for-longer policy setting.
By Friday, risk appetite improved materially. Easing tensions in the Middle East pushed oil prices lower, while gold and materials stocks rebounded strongly. Travel stocks also rallied as investors priced in a less severe geopolitical backdrop, while energy stocks lagged as the oil price premium unwound.
Local Shares Whipsaw Through Inflation, Oil and RBA Expectations Before Closing the Week Higher
The Australian market began the week attempting to stabilise after earlier heavy selling, with the S&P/ASX 200 rising 0.40% on Monday as miners and materials stocks recovered. Sentiment was helped by reports that the US and Iran were moving closer to an agreement that could reopen the Strait of Hormuz, alleviating fears of a prolonged energy shock.
Mining and resource names were the clear beneficiaries early in the week. Genesis Minerals, Whitehaven Coal and IperionX all performed strongly as investors rotated back into commodity-linked exposures. However, conviction remained fragile. Woodside Energy came under pressure as oil prices eased, while Seek also weakened as investors remained cautious around domestic growth.
Tuesday saw sentiment reverse again. The ASX 200 fell 0.39% to 8,657.8 points, as renewed US strikes near the Strait of Hormuz pushed WTI crude back above US$92 a barrel and sent Australian bond yields above 4.9%. The move reignited concerns that energy-driven inflation could compel the RBA to maintain restrictive policies for a longer period.
Financials led the market lower. National Australia Bank, Commonwealth Bank, Westpac and Macquarie Group all declined as investors reduced exposure to rate-sensitive sectors ahead of the inflation release. ASX Limited was the standout corporate disappointment, tumbling 11.8% after lifting its technology and infrastructure spending outlook, raising concerns about margin pressure, regulatory costs, and execution risk.
Wednesday delivered the week’s sharpest positive reversal. The ASX 200 rose by 0.69% to 8,717.7 points after headline inflation slowed to 4.2%, easing fears of an immediate June rate hike. Bond yields fell, rate-sensitive sectors recovered and technology names rallied strongly. Megaport jumped more than 8%, while Austal also surged as investors rotated back into growth and industrial exposures.
Despite the relief rally, the inflation data was not clean. Headline CPI cooled largely due to fuel relief, but core inflation remained sticky. Electricity, housing, rents and transport costs continued to show pressure, keeping the RBA cautious. The market, therefore, moved from fearing an immediate hike to pricing a prolonged period of restrictive rates.
Thursday then erased much of Wednesday’s optimism. The ASX 200 dropped 1.43% to 8,592.9 points, with renewed Middle East conflict pushing Brent crude toward US$96 a barrel. Banks, miners and property stocks all sold off as investors reassessed the risk of imported inflation and weaker domestic demand. Household spending fell by 1.1% in April, suggesting consumers are increasingly stretched by higher mortgage repayments, living costs and uncertainty.
Business investment data provided a more constructive offset, with private capex rising strongly on the back of major spending in data centres, AI infrastructure and high-performance computing equipment. However, traditional construction and infrastructure spending weakened, highlighting the divergence between digital infrastructure investment and more cyclical physical investment.
Friday delivered a strong recovery. The ASX 200 climbed 1.6%, or 138.8 points, to 8,731.7, recovering from Thursday’s sell-off and finishing the week higher. Sentiment improved after reports of a tentative 60-day ceasefire extension between the US and Iran. Materials led the advance, with gold rebounding to around US$1,500 an ounce after Thursday’s two-month low.
West African Resources rose 7.8%, Ora Banda Mining gained 7.5%, Newmont advanced 3.8%, and BHP climbed 2.9%. Travel stocks also rallied, with Qantas up 3.2% and Flight Centre surging 8.2% as investors responded to the potential easing in geopolitical risk. Commonwealth Bank gained 2.2% amid end-of-month rebalancing, while ANZ, NAB and Westpac posted more modest gains. Energy underperformed, with Woodside flat and Santos down slightly as oil prices eased.
Overall, the week reinforced how sensitive Australian equities remain to the interaction between oil prices, bond yields, inflation expectations and RBA policy. The market continues to find support near 8,500, while the 8,900 region remains the key resistance level.
Wall Street Resilience and AI Momentum Support Global Risk Appetite
International markets provided an important stabilising force throughout the week, even as Australian equities remained highly sensitive to Middle East headlines and domestic inflation data.
Wall Street generally held up well, supported by ongoing strength in technology, artificial intelligence infrastructure and selected growth names. Early in the week, US markets helped improve sentiment after the S&P 500 and Nasdaq continued pushing toward record levels, led by technology and semiconductor-related exposures.
The global equity backdrop remained constructive despite geopolitical uncertainty. Investors continued to rotate into AI-related companies, cloud infrastructure, digital connectivity, and semiconductor demand, reinforcing the view that artificial intelligence investment remains one of the dominant capital allocation themes across global markets.
However, the strength in US technology was not without risk. Valuation sensitivity remains elevated, as earnings disappointments or softer forward guidance continue to trigger sharp reactions. Zscaler’s heavy after-hours decline during the week reminded investors that even high-quality technology names remain vulnerable when expectations are stretched.
By Thursday, US futures were largely flat as investors awaited the Federal Reserve’s preferred inflation gauge, the PCE price index, along with jobless claims, personal income and new home sales data. These releases were viewed as important indicators of whether Middle East-driven energy volatility was beginning to flow into broader inflation expectations.
The broader message from global markets was that liquidity remains ready to rotate back into equities whenever inflation fears ease, but investors remain highly selective. AI infrastructure, cloud computing, data centres and digital connectivity continue to attract strong institutional interest, while energy, defensives and rate-sensitive sectors remain heavily influenced by bond yields and geopolitical headlines.
Oil Drives the Week, Gold Rebounds Late, and Materials Recover as Risk Appetite Returns
Commodities were the dominant force behind market sentiment this week.
Oil remained the primary driver of inflation expectations and risk appetite. Early in the week, crude prices eased after reports suggested the US and Iran were moving closer to reaching an agreement that could lead to the reopening of the Strait of Hormuz. That helped calm inflation fears and supported a recovery across miners and broader risk assets.
However, Tuesday and Thursday showed how fragile that optimism remained. Renewed US military action near the Strait of Hormuz pushed WTI crude back above US$92 a barrel and Brent crude towards US$96, reintroducing a geopolitical risk premium into energy markets. Investors quickly moved to price in the possibility that elevated oil prices could flow through transport, freight, food and logistics costs, complicating the inflation outlook for central banks.
By Friday, that risk premium began to unwind again. Brent crude fell by 0.9% to US$92.87 a barrel, extending its monthly decline to around 18%, as markets responded to reports of a tentative 60-day ceasefire extension. Energy stocks lagged behind as investors reduced exposure to the oil shock trade.
Gold also experienced a volatile week. Earlier in the week, gold struggled despite geopolitical tensions, as a stronger US dollar and higher real yields reduced safe-haven demand. Gold fell below US$1,900 an ounce on Thursday, reaching a two-month low. However, the metal rebounded strongly into Friday, recovering to around US$4,500 an ounce, which supported local gold producers including West African Resources, Ora Banda Mining and Newmont.
Base metals and bulk commodities remained more mixed. BHP and Rio Tinto faced pressure during the week as concerns around Chinese demand and softer global manufacturing momentum weighed on iron ore and copper sentiment. However, the broader materials sector recovered strongly into Friday as risk appetite improved and investors rotated back towards quality resource exposure.
Copper fundamentals remain structurally attractive over the medium to long term, supported by electrification, renewable energy investment, grid expansion and constrained global supply. However, short-term pricing remains highly sensitive to Chinese industrial activity, US dollar strength and global growth expectations.
Investor Pulse Stock Highlights
Portfolio Wins Across Industrials, Mining Services and Copper Exposure
A key feature of the recent portfolio performance has been the strength across selected industrial, mining services and commodity linked holdings. Several positions have delivered strong realised or partially realised gains, reinforcing the value of disciplined entry points, earnings momentum and exposure to structural growth themes.
Macmahon Holdings Limited (ASX: MAH) was one of the recent portfolio highlights. We locked in a gain of approximately 34.61% from an average entry price of around $0.65 per share. The company has continued to benefit from strong mining activity across Australia, improved operational execution and a growing pipeline of contract wins. Over the trailing twelve months, revenue climbed to approximately $2.56 billion, while net profit nearly doubled year-on-year to around $92 million. Macmahon also continues to benefit from stronger cash generation and a growing underground mining pipeline.
SHAPE Australia Corporation Limited (ASX: SHA) was another major contributor. We secured an impressive 70.42% upside following an average entry price of approximately $4.46 per share. SHAPE has delivered exceptional operational momentum, supported by strong project execution, acquisition synergies and robust demand across commercial fit-outs and refurbishment activity. Revenue rose more than 33% during the latest reporting period, while trailing twelve-month revenue now exceeds $1 billion. Net income also increased more than 43% year-on-year, highlighting the strength of the operating model.
GR Engineering Services Limited (ASX: GNG) has remained one of the strongest industrial holdings in the portfolio. We progressively built the position at an average entry price of approximately $2.86 per share before securing gains of around 76.67%. The company continues to benefit from elevated investment activity across critical minerals, gold and copper developments, alongside strong engineering demand across the mining sector. GNG remains well positioned in an environment where resource companies continue investing in development, processing infrastructure and project execution capability.
Sandfire Resources Limited (ASX: SFR) also performed strongly over the period, allowing us to partially realise profits while securing approximately 40.12% upside from an average entry price near $12.95 per share. Copper market fundamentals remain favourable, supported by electrification demand, constrained global supply, renewable infrastructure investment and long-term grid expansion. While copper pricing can remain volatile in the short term, the structural demand outlook continues to support quality copper producers over the medium term.
Collectively, these holdings demonstrate the portfolio’s focus on companies with clear earnings momentum, strong operating leverage and exposure to durable structural themes. Mining services, industrial execution, infrastructure renewal, copper demand and AI-related investment remain important areas of opportunity as markets continue rotating between growth, cyclicals and inflation beneficiaries.
Outlook
Market Holding Above Support, but Macro Risks Remain Unresolved
The market enters June with the ASX 200 holding above its key 8,500 support level, while 8,900 remains the key resistance level to watch.
The near term outlook will depend heavily on three factors.
Middle East diplomacy remains critical. Any confirmed de-escalation between the US and Iran would likely reduce the oil risk premium, ease inflation concerns, and support further risk appetite across equities. However, any renewed military escalation near the Strait of Hormuz could quickly push oil higher again and place renewed pressure on bonds, currencies and equities.
Second, the RBA remains trapped between slowing growth and sticky inflation. Softer headline CPI reduced the risk of an immediate June rate hike, but elevated core inflation means rate cuts remain unlikely in the near term. The market is increasingly pricing a prolonged higher-for-longer environment rather than a clean pivot toward easing.
Third, domestic demand is clearly weakening. Household spending data showed consumers are becoming more cautious, while leading economic indicators point to slowing momentum into the second half of 2026. That creates a more selective equity market, where earnings quality, balance sheet strength and pricing power will matter more.
For now, the market remains supported by liquidity, resilient global risk appetite and strong thematic interest in AI infrastructure, mining services, gold, copper and selected industrials. However, volatility is likely to remain elevated while oil prices, bond yields and geopolitical headlines continue to drive day-to-day market direction.
