Evening Wrap: ASX 200 climbs as banks and BHP lead, telcos tank on SpaceX threat

In a nutshell:

• Large caps led the charge, with Banks (+1.8%) and Resources (+1.3%) rallying while there was little appetite for the Small Ords and Emerging Companies indices, which fell 0.1% and 0.7% respectively

• Telcos tanked, with TPG (-4.9%) and Telstra (-2.5%) lower after SpaceX’s low-band spectrum deal stoked fears of direct-to-cell competition

• Southern Cross Electrical Engineering rose 7.7% after agreeing to acquire Entire for up to $112m, a deal set to be at least 18% EPS accretive in FY27

Let's dive in

• The ASX 200 trended higher and finished near best levels, now up 1.4% over the last two sessions and just ~0.25% away from the key 200-day moving average

• Breadth was a near even split of advancers and decliners, despite only four sectors finishing higher. The top end posted relatively strong gains (ASX 200 Banks and Resources up 1.8% and 1.3% respectively), while the ASX 300 and All Ords lagged (up 0.73% and 0.67% respectively) and the more risk-driven/speculative indices failed to catch a bid (Small Ords and Emerging Companies down 0.1% and 0.7% respectively). So it’s really a bifurcated market, where speculative pockets are still struggling to turn while large caps are being bought up

• Financials were on the cusp of breaking down to a one-and-a-half-year low, but are now making the turn

• Materials were also in the midst of a slow rollover after a ~10% dip from the 25 August record, but are now in the early innings of stabilising. Watching copper exposures today, you really see large caps like Sandfire (+3.5%), BHP (+2.4%), Capstone (+2.2%) and South32 (+2.0%) hold up, while smaller names like Marimaca (-2.7%), Cyprium Metals (-2.3%), Firefly Metals (-2.2%) and Hot Chilli (-1.6%) fell, and Aeris and 29Metals went nowhere, so really, no love for smalls

• Tech has been catching our eye lately, mainly off the back of last Friday’s session, where stocks like PME, WTC, XRO and 360 rallied 4-5%. The US-listed iShares Expanded Tech-Software Sector ETF then rallied 2.8% to its highest level since November 2025. While US software stocks are busy breaking out, the best we could do was a 0.8% gain today, well off session highs of 2.7%. Still, plenty of names are bottoming and making the turn from 20-30% drawdowns in recent weeks. Zip (+5.5%) topped the leaderboard ahead of its 1Q27 update on 23 October. Megaport (+4.7%) bounced after a four-day, ~15% skid likely tied to the failed Firmus IPO. Xero (+2.8%) is up 9.6% over the last three sessions as it works its way off a seven-year low, while WiseTech (+1.3%) faded from a session high of 5.0%

• Telcos tanked, with notable decliners including TPG (-4.9%), Tuas (-3.9%), Telstra (-2.5%) and Spark New Zealand (-1.8%). This was likely driven by SpaceX’s low-band spectrum deal, with analysts warning that satellite-based direct-to-cell competition poses a looming disruption for traditional telco providers

• Overall, markets have put in a tentative low, while Aussie bond yields edged lower across the curve, with the 3, 10 and 30-year yields all down around 3 bps to 4.90%, 5.33% and 5.80% respectively. More broadly, recent strength has remained highly selective and the small end of town continues to lag. Any risk-on appetite is flowing through to the large end, including battered software names. US earnings season kicks off later this week and will be a key test of whether solid markets can co-exist with high yields, provided earnings momentum continues

• On a side note, always napkin maths M&A. Southern Cross Electrical Engineering (SXE) announced the acquisition of Victorian fire protection and HVAC services group Entire for up to $112m, representing 5.5x FY26 EV/EBIT. It’s a fairly modest deal relative to SXE’s $1.5bn market cap, but is set to be at least 18% EPS accretive on an FY27 pro forma basis (so a $1.5bn company, paying $112m for 18% EPS accretion?!) The maths is mathing here, with SXE opening 3.6% higher and finishing up 7.7%. Keep an eye out for how analysts react tomorrow

No major economic announcements.