We review May’s market moves and key drivers. With the XJO representing the top 200 ASX-listed stocks and forming the basis for many passive ETFs, we explore movements within this index. Additionally, as the XJO is the most actively traded options series, we examine market positioning heading into June.
Key Drivers
- Global Market Tailwinds Boosted Risk Appetite
- The S&P/ASX 200 gained ~0.9% for the month, supported by strength in U.S. markets, with the S&P 500 posting its best monthly performance since November 2023.·
- Optimism over U.S.–China trade diplomacy and expectations of a soft landing for the U.S. economy improved global risk sentiment, lifting equities globally.
- Easing Domestic Inflation Reinforced Rate Cut Bets
- April CPI slowed to 3.6%, down from 3.9%, reinforcing the view that the RBA may begin easing in late 2025 or early 2026.
- Interest-rate-sensitive sectors such as consumer discretionary and REITs outperformed, helped by lower bond yields and easing mortgage stress.
- Commodity Prices Were Mixed, Driving Sector Divergence
- Iron ore prices weakened, falling to a one-month low near US$95/t in late May, weighing on miners like Fortescue and Rio Tinto.
- However, gold stocks surged on safe-haven demand and a weaker U.S. dollar, with Northern Star (NST) and Evolution (EVN) among the standouts.
- Energy stocks underperformed early but recovered late in the month as OPEC+ signalled cautious supply increases.
Overall Market Moves
Global markets provided a supportive backdrop for the ASX in May, with the S&P 500 rising 4.8% and the Nasdaq gaining 6.9%, driven by easing U.S. inflation and renewed confidence in a soft landing for the global economy. A softer U.S. dollar and hopes for resumed U.S.–China trade cooperation lifted sentiment, while U.S. 10-year Treasury yields fell around 20 basis points over the month, helping to boost equity valuations. However, geopolitical risks returned late in May after President Trump announced plans to double tariffs on steel and aluminium, prompting concerns over a potential new phase in global trade tensions. Despite this, the MSCI World Index advanced 3.5%, reflecting broad-based optimism that central banks may soon pivot toward rate cuts amid slowing inflation and stable labour markets.
Moves in the XJO
With CBA having the largest market capitalisation, it’s not surprising that it continues to contribute the most to movements in the XJO. CBA rose 6% in May, adding 48 points to the index. Aristocrat Leisure was the biggest detractor, taking 8 points out with its share price falling 7% over the month.
Table 1. Key index points contributors to the XJO
Sector Moves
At a sector level, Information Technology and Energy were the top performers, while Consumer Staples was the worst-performing sector.
Figure 2. Sector moves for the month of May.
Table 2. Option position summary of the five largest traded options series at the end of October (Source: ASX)
NOTE: Option Volumes in the above table are single-sided (i.e. on a per contract basis) excluding Market Makers
1. Total Volume including volume executed by Market Makers 2 Derivatives Liquidity Ratio (DLR) = options volume (in shares) / volume of underlying security
2. Put/Call Ratio: total volume of Puts excluding Market Makers / total volume of Calls
3. The net calls & net puts are the number of options contracts bought minus the number of options contracts sold, excluding Market Makers
Options Moves
At the end of the month, the XJO continued to have the highest open interest, with a significant net number of puts as investors moved to protect portfolios and hedge against uncertainty.
CBA, trading near record highs, saw increased bought puts as investors positioned for a possible pullback. FMG’s options suggest further downside hedging, with more puts bought and calls sold. NST options indicate bullish positioning, likely as a leveraged play on gold prices. BHP showed increased put buying, reflecting hedging activity amid iron ore price softness.
TAH entered the top five for the first time since we began tracking this data, with a notable number of sold puts, suggesting investors may be looking to buy the stock or are seeking income while expecting a price recovery.
Popular trades for the month:
Selling calls in QBE: With QBE near consensus target prices, some clients sold call options to generate additional income.
Moves Ahead
As the financial year-end approaches, underperforming stocks may face increased selling pressure as investors realise capital losses to offset gains. This may weigh on small caps, speculative tech, and lagging sectors such as lithium and biotech (e.g. PRL, PAR), but may also set the stage for rebound opportunities in July.
President Trump’s renewed tariff threats — particularly on steel and aluminium — could reignite global trade tensions, pressuring export-sensitive sectors like resources, industrials, and cyclicals. Commodity prices, especially iron ore, may stay volatile depending on China’s response, whether through stimulus or retaliation.
Key macro events in June include the European Central Bank’s expected rate cut, and U.S. inflation and employment data. A hot inflation print or hawkish Fed rhetoric could push global yields higher, weighing on growth stocks and REITs.
Further Information
Our specialised team of advisors provide guidance for all levels of investors, tailoring your experience to help meet your investment needs.
As our client, iInvest Trading & Advisory will provide you with daily research, economic updates, and trading ideas.
We have offices in Burleigh Heads QLD and Beechworth Vic. To make an appointment to speak to one of our advisors please call. 07 55208788
DISCLAIMER: This Market update has been prepared by the Trading Desk and is not intended to be a research report. We believe this information is correct at the time of its compilation however no warranty is made as to its accuracy, reliability, or completeness. We cannot guarantee the performance or return on investments and those acting on this information do so at their own risk. The information is of a general nature, for the recipient’s information only and has been prepared without considering any particular individual’s investment objectives, financial situation or particular needs (“relevant circumstances”). Before acting on this information, you should carefully consider the appropriateness of it having regard to your own relevant circumstances and if you require advice regarding any aspect of the information and statements of opinion set out in this document, particularly as to whether you should base an investment decision upon it, please contact your financial adviser
DISTRIBUTION: The material contained in this communication is prepared for the exclusive use of clients of iInvest Trading & Advisory Pty Ltd (“iInvest Trading & Advisory”). iInvest Trading & Advisory is a Corporate Authorised Representative (No. 431611) of Zodiac Securities Pty Ltd (AFSL No. 398350). The information contained herein is confidential and may be legally privileged. If you are not the intended recipient, confidentiality is not lost nor privilege waived by your receipt of it. Please delete and destroy all copies. You should not use, copy, disclose or distribute this information without the express written authority of iInvest.
DISCLOSURE: iInvest Trading & Advisory, its related companies, officers, employees, and agents (“iInvest”) may have a relevant interest in some of the securities mentioned but those holdings are not material unless disclosed in this communication. These holdings (or absence of holdings) may change at any time after publication of this communication, without notice. iInvest may earn income, fees, brokerage or commissions or other benefits because of recommendations, dealing or transactions in the securities mentioned in this communication. These interests do not influence iInvest in providing the general advice contained in this communication. iInvest may trade in financial products which is contrary to the recommendations given in this communication. Nothing in this communication shall be construed as a solicitation to buy or sell a financial product, or to engage in or refrain from engaging in any transaction. We cannot guarantee that the integrity of this communication has been maintained, is free from errors, omissions, misstatements, virus interception or interference.1
Copyright © 2024 iInvest Trading & Advisory. All Rights Reserved.
You are receiving this email as a valued customer of iInvest Trading & Advisory
