Evening Wrap: ASX 200 extends rebound as miners lift, small caps slip toward two-month low

In a nutshell:

• ASX 200 on a three-day win streak, now up 1.4% since Thursday's 2% selloff

• Materials rose 1.0% for a third straight gain, led by BHP, Rio Tinto and Fortescue (all up ~1.5%), with lithium names like Liontown (+3.1%) also catching a bid

• Small caps lagged, with the Emerging Companies index down 0.82% to around a two-month low as high-beta names like Weebit Nano (-12.9%) sold off sharply

Let's dive in

• An encouraging session for the ASX 200, which closed a little off session highs (compared to Monday's flattish close vs a 0.62% high). Breadth was decent, with nine sectors and 125 (62.5%) constituents finishing in the green

• The smaller end of town struggled, with the Emerging Companies and Small Ords indices down 0.82% and 0.27% respectively, both trading at or on the cusp of a two-month low

• ASX 200 Real Estate bounced off its lowest level since January 2024 and snapped a three-day losing streak. This was despite the Australian 10-year yield reversing an early 5 bp decline to trade fractionally higher at 5.41%

• ASX 200 Materials rose 1.0%, extending its win streak to three sessions. Gains were largely driven by BHP, Rio Tinto and Fortescue (all up ~1.5%). Lithium names like PLS Group (+2.4%), MinRes (+2.4%) and Liontown (+3.1%) caught a bid, while coal names like Whitehaven, New Hope and Yancoal reversed early declines of ~1% to finish ~1% higher

• Today's session still has the whiff of a relief rally, amid a less supportive macro backdrop. Brent is up 0.6% to US$100.8 a barrel, global bond yields have either reversed early softness or continued to march higher, and the US Dollar Index continues its vertical ascent to the highest level since April 2025. Larger caps carried the index higher, but the weakness at the smaller end was clear, with high-beta names like Weebit Nano (-12.9%), Elsight (-11.5%), DigiCo (-6.9%), 29Metals (-5.4%), DroneShield (-4.1%) and Sunrise Energy (-4.1%) pulling back sharply

  • SCX.ai is a good example. The AI infrastructure business, which listed in August 2026 at 30 cents, rallied as much as ~35% between 25 September and 1 October on the back of Megaport's ~$1bn contract win and Firmus hype. It was up 6.6% in early trade today before finishing the session down 9.3%

• Overall, plenty of stocks and sectors are now on a three-day win streak following last Thursday's tumble, but still, a market that has much more to prove

• The Westpac-Melbourne Institute Consumer Sentiment Index fell 4.7% to 80.4, among the 40 worst reads since the survey began in the early 1970s

  • Sentiment after the RBA decision plunged to 67.2 from 86.9 beforehand, a level only seen in complete surveys during the early 1990s recession

  • Mortgage rate expectations rose 5.5% to 179.7, with over 80% of post-hike respondents expecting further rises vs 63% last month

  • The 'time to buy a major household item' index fell 7.1% to 83, a full 40 points below its long-run average

  • House price expectations rose 4.3% to 115.1, but the read fell to 103 after the RBA decision from 121 beforehand

  • Unemployment expectations rose 1.9% to 142.1, above the long-run average of 129, with job fears highest in construction, hospitality and transport