Evening Wrap: ASX 200 tumbles 1%, banks bear the brunt of worst selloff since April

The S&P/ASX 200 closed 89.0 points lower, down 1.02%.

In a nutshell:

• The ASX 200 retreated from record highs, suffering worst selloff since 'Liberation Day'

• Index fell 89 points as investors locked in profits following three record highs in the past six sessions

• Financials were the worst performers, weighed down by bank weakness

Let's dive in.

ASX 200 Session Chart

ASX 200 closed down 89.0 points (Source: Market Index)

Markets

• Financials (-2.26%) were by far the worst performers with the banking sector under pressure: Westpac (-3.6%), Commonwealth Bank (-2.5%), ANZ (-2.5%) and National Australia Bank (-2.4%) all traded sharply lower on stretched valuation concerns.

• AMP defies sector weakness: the financial services provider surged 9.8% to a five-month high of $1.69 following strong Q2 results, with its superannuation arm posting first positive net inflows since 2017, supported by platform growth

• Mixed performance elsewhere: While financials dragged the market lower, materials gained ground on surging iron ore prices, with only two of eleven sectors finishing higher as breadth remained overwhelmingly negative.

• Materials (+0.32%) showed resilience: Iron ore futures jumped 3.3% to $US104.10 per tonne on China's 1.2 trillion yuan hydropower project announcement, pushing Fortescue Metals up 1.7%, Rio Tinto 1.2% and BHP 0.4% higher.

• Takeover activity continues: Insignia Financial fell 5.8% after reiterating ongoing discussions with CC Capital over a potential $3.4 billion takeover, but stressing no certainty the talks would lead to a formal offer.

Economy

• China maintains monetary stance: The People's Bank of China kept benchmark lending rates unchanged as expected, with the one-year LPR at 3.0% and five-year LPR at 3.5%, following better-than-expected Q2 economic data.

• Iron ore demand optimism: Chinese stimulus hopes and the massive Tibet dam infrastructure project boosted iron ore prices to four-month highs, with the project expected to provide significant demand for construction materials, including steel.

• New Zealand inflation data: New Zealand's annual inflation rate rose to 2.7% in Q2, its highest in a year but below economists' forecasts of 2.8%, supporting expectations for further RBNZ rate cuts.

Interesting Movers

Trading higher

• +17.81% Syrah Resources (SYR) – Momentum following US graphite tariffs on China, broker upgrade

• +11.85% Vulcan Energy Resources (VUL) – No news

• +11.35% Liontown Resources (LTR) – Momentum continues

• +11.18% Block Inc (XYZ) – Joining the S&P 500 on Wall Street from Wednesday

• +11.00% Pantoro Gold (PNR) – Quarterly results presentation

• +9.77% AMP (AMP) – Strong Q2 results

Trading lower

• -10.19% Brightstar Resources (BTR) – Strategic acquisition of Aurumin Consolidates Sandstone

• -7.69% Ioneer (INR) – No news

• -5.76% Insignia Financial Ld (IFL) – Ongoing discussions with CC Capital

• -5.25% Pinnacle Investment Management Group (PNI) - Full year FY2025 financial results

• -5.23% MTM Critical Metals (MTM) – No news

Broker Notes

29Metals (29M)

• Downgraded to Underweight from Overweight at Jarden; Price Target: $0.30 from $0.32

AGL Energy (AGL)

• Retained at Equal weight at Morgan Stanley; Price Target: $11.88

AML3D (AL3)

• Retained at Speculative buy at Bell Potter; Price Target: $0.35

AMP (AMP)

• Retained at Neutral at UBS; Price Target: $1.35

ANZ Group Holdings (ANZ)

• Retained at Overweight at Jarden; Price Target: $30.00

APA Group (APA)

• Retained at Equal weight at Morgan Stanley; Price Target: $8.55 from $8.28

Eagers Automotive (APE)

• Retained at Overweight at Morgan Stanley; Price Target: $20.00

• Downgraded to Sell from Neutral at UBS; Price Target: $16.50 from $14.80

Arena REIT (ARF)

• Downgraded to Underperform from Outperform at Macquarie; Price Target: $3.96

Burgundy Diamond Mines (BDM)

• Upgraded to Speculative buy at Bell Potter; Price Target: $0.04 from $0.05

• Retained at Hold at Bell Potter; Price Target: $0.05

Bendigo and Adelaide Bank (BEN)

• Retained at Neutral at Jarden; Price Target: $11.60 from $11.50

BHP Group (BHP)

• Retained at Neutral at Macquarie; Price Target: $41.00

• Retained at Overweight at Morgan Stanley; Price Target: $44.00 from $48.00

• Retained at Overweight at Morgan Stanley; Price Target: $48.00 from $39.50

• Retained at Accumulate at Ord Minnett; Price Target: $41.00

• Retained at Sector perform at RBC Capital Markets; Price Target: $44.00 from $45.00

• Retained at Neutral at UBS; Price Target: $40.00

Bank of Queensland (BOQ)

• Retained at Underweight at Jarden; Price Target: $6.70

Commonwealth Bank of Australia (CBA)

• Retained at Sell at Jarden; Price Target: $110.00

Challenger (CGF)

• Retained at Buy at UBS; Price Target: $9.15

Coles Group (COL)

• Retained at Buy at UBS; Price Target: $24.00 from $23.50

Cleanaway Waste Management (CWY)

• Retained at Overweight at Morgan Stanley; Price Target: $3.18 from $3.08

Digico Infrastructure REIT (DGT)

• Initiated at Hold at Bell Potter; Price Target: $3.40

Deterra Royalties (DRR)

• Retained at Equal weight at Morgan Stanley; Price Target: $4.00 from $3.65

Deep Yellow (DYL)

• Retained at Speculative buy at Canaccord Genuity; Price Target: $1.61

Fortescue (FMG)

• Retained at Overweight at Morgan Stanley; Price Target: $19.45 from $16.50

Goodman Group (GMG)

• Initiated at Buy at Bell Potter; Price Target: $39.25

HUB24 (HUB)

• Upgraded to Buy from Neutral at UBS; Price Target: $105.00 from $74.00

Insurance Australia Group (IAG)

• Retained at Neutral at UBS; Price Target: $9.30

IGO (IGO)

• Retained at Outperform at Macquarie; Price Target: $4.50

• Downgraded to Underweight from Equal weight at Morgan Stanley; Price Target: $3.20 from $3.50

Iluka Resources (ILU)

• Retained at Overweight at Morgan Stanley; Price Target: $5.55 from $4.65

Ingenia Communities Group (INA)

• Retained at Buy at Citi; Price Target: $6.20 from $6.50

Integrated Research (IRI)

• Retained at Buy at Bell Potter; Price Target: $0.70 from $0.80

Judo Capital Holdings (JDO)

• Retained at Buy at Jarden; Price Target: $2.40 from $2.60

James Hardie Industries Plc (JHX)

• Downgraded to Neutral from Overweight at JPMorgan; Price Target: $42.60 from $44.00

LendLease Group (LLC)

• Retained at Equal weight at Morgan Stanley; Price Target: $7.12

Liontown Resources (LTR)

• Retained at Underperform at Macquarie; Price Target: $0.55

Lynas Rare Earths (LYC)

• Downgraded to Sell from Hold at Ord Minnett; Price Target: $7.80 from $8.70

Magnetic Resources NL (MAU)

• Retained at Buy at Shaw and Partners; Price Target: $2.53

Magellan Financial Group (MFG)

• Retained at Buy at UBS; Price Target: $9.50

Mirvac Group (MGR)

• Retained at Equal weight at Morgan Stanley; Price Target: $2.45

Mineral Resources (MIN)

• Retained at Overweight at Morgan Stanley; Price Target: $47.05 from $35.00

Macquarie Group (MQG)

• Retained at Underweight at Jarden; Price Target: $200.00

Mesoblast (MSB)

• Retained at Speculative buy at Bell Potter; Price Target: $3.50 from $3.40

• Retained at Buy at Bell Potter; Price Target: $3.50 from $3.40

National Australia Bank (NAB)

• Retained at Underweight at Jarden; Price Target: $29.00

Navigator Global Investments (NGI)

• Retained at Buy at Ord Minnett; Price Target: $2.65

NIB Holdings (NHF)

• Retained at Buy at UBS; Price Target: $7.85

Netwealth Group (NWL)

• Retained at Neutral at UBS; Price Target: $35.00

News Corporation (NWS)

• Retained at Overweight at Jarden; Price Target: $54.60 from $54.00

NEXTDC (NXT)

• Retained at Outperform at Macquarie; Price Target: $22.10 from $13.82

Origin Energy (ORG)

• Retained at Underweight at Morgan Stanley; Price Target: $9.46

Paladin Energy (PDN)

• Downgraded to Equal weight from Overweight at Morgan Stanley; Price Target: $4.50 from $5.70

Pilbara Minerals (PLS)

• Retained at Buy at Bell Potter; Price Target: $2.00

• Retained at Outperform at Macquarie; Price Target: $1.50

• Retained at Overweight at Morgan Stanley; Price Target: $1.85 from $1.70

QBE Insurance Group (QBE)

• Retained at Buy at UBS; Price Target: $26.00

REA Group (REA)

• Retained at Hold at Bell Potter; Price Target: $262.00

• Retained at Underweight at Jarden; Price Target: $216.00 from $210.00

• Retained at Neutral at Macquarie; Price Target: $260.00 from $265.00

Rio Tinto (RIO)

• Retained at Equal weight at Morgan Stanley; Price Target: $123.00 from $118.00

South32 (S32)

• Retained at Neutral at Citi; Price Target: $3.40

• Retained at Overweight at Morgan Stanley; Price Target: $3.50 from $3.05

Steadfast Group (SDF)

• Retained at Buy at UBS; Price Target: $6.85

SEEK (SEK)

• Retained at Outperform at Macquarie; Price Target: $27.00 from $24.24

Sandfire Resources (SFR)

• Retained at Underweight at Morgan Stanley; Price Target: $8.35 from $6.75

Select Harvests (SHV)

• Retained at Market weight at Wilsons; Price Target: $4.02 from $4.83

Smart Parking (SPZ)

• Retained at Buy at Shaw and Partners; Price Target: $1.25

Santos (STO)

• Retained at Buy at Bell Potter; Price Target: $8.83

• Retained at Accumulate at Ord Minnett; Price Target: $8.89 from $8.20

Suncorp Group (SUN)

• Retained at Neutral at UBS; Price Target: $22.50

Sayona Mining (SYA)

• Retained at Outperform at Macquarie; Price Target: $0.02

Syrah Resources (SYR)

• Upgraded to Overweight from Neutral at Jarden; Price Target: $0.40 from $0.28

Westpac Banking Corporation (WBC)

• Retained at Underweight at Jarden; Price Target: $30.00

Wesfarmers (WES)

• Retained at Lighten at Ord Minnett; Price Target: $72.00 from $69.00

Whitehaven Coal (WHC)

• Retained at Overweight at Morgan Stanley; Price Target: $7.25 from $6.20

Woolworths Group (WOW)

• Retained at Neutral at UBS; Price Target: $34.00 from $32.00

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