ASX 200 Suffers Worst Week This Year: Materials Drops, Tech Rallies

The ASX 200 closed Friday at 8,851, down 1% on the day and 2.95% for the week, as escalating conflict between the US, Israel and Iran triggered a violent commodities rout that wiped roughly A$120 billion from the broader market while defensive rotation into technology and defence stocks offered pockets of resilience.

Today’s session saw the benchmark index end its worst week since early 2025, with the All Ordinaries falling 0.87% to 9,085.10 and losing 2.83% over five days.

Sector performance diverged sharply, with the S&P/ASX 200 Materials Index falling 4.09% on the day and 7.84% lower this week, while the ASX 200 Information Technology Index surged 4.57% to close at 1,840.60, breaking above the 1,800 resistance level that had capped earlier attempts at a bounce. Financials slipped 0.23%, industrials retreated 0.37%, and energy managed a marginal 0.03% gain despite Brent crude pushing into the low-to-mid US$80 level.

Leaders and Laggards Today

Among the individual movers, WiseTech Global (ASX:WTC) led the charge with a 10.83% jump to $52.72, followed by DroneShield (ASX:DRO)up 10.0% to $4.07, Magellan Financial Group (ASX:MFG) gaining 9.27% to $11.55, Pro Medicus (ASX:PME) advancing 9.23% to $132.70, and Xero (ASX:XRO) climbing 4.46% to $87.63.

On the downside, Deep Yellow (ASX:DYL) dropped 11.79% to $2.17, Catalyst Metals (ASX:CYL) fell 11.34% to $7.04, Sandfire Resources (ASX:SFR) dropped 9.58% to $17.09, Westgold Resources (ASX:WGX) declined 8.17% to $6.63, and Northern Star Resources (ASX:NST) shed 8.11% to $26.98.

The Root Cause

The week’s turbulence stems directly from the escalating Middle East conflict, which has disrupted shipping through the Strait of Hormuz and forced markets to reprice both inflation expectations and the timing of Federal Reserve interest rate cuts. What began as a classic flight-to-safety bid for gold and defensive assets quickly morphed into a more complex rotation as oil’s rally revived stagflation fears, pushing the expected first Fed cut from July toward October and undermining appetite for expensive growth stocks and leveraged commodity plays alike.

Energy stocks benefited from the oil spike, gaining more than 7% over the week, while basic materials bore the brunt of a sharp reversal in crowded long positions. Gold, which had traded roughly 25% above its 200-day moving average on safe-haven flows and central bank buying, fell 4 to 5% from recent highs as markets refocused on higher real yields and delayed monetary easing. Silver, platinum and other metals sold off in sympathy, triggering margin calls and forced liquidation across the mining complex.

The commodities sell-off hit Australian miners with particular force. The All Ords Gold Index dropped as much as 7% intraday Friday, dragging down high-beta producers that had delivered outsized gains during gold’s run-up. Westgold Resources, Genesis Minerals, Northern Star Resources and Ora Banda Mining all featured among the session’s worst performers, validating warnings from Bank of America’s global fund manager survey that long gold positions had become the most crowded trade in global markets.

Deep Yellow’s 11.79% plunge reflected both the broader uranium sector weakness and company-specific disappointment. The uranium developer reported a net loss before tax of A$7.78 million for the six months to December 31, 2025, compared with a A$2.47 million loss in the prior corresponding period, while revenue declined to A$4 million from A$6.92 million and cash holdings fell to A$187 million from A$217 million. Management attributed much of the loss to exploration costs and impairment charges related to legal issues at its Namibian project and the relinquished Kingston project in Australia. The result landed just as uranium equities across the ASX were already down 7 to 9% on the day, amplifying the stock’s decline.

Sandfire Resources, a copper-focused miner, fell nearly 10% with no company-specific catalyst beyond the broad-based de-risking of cyclical materials exposure. Copper slipped back below US$6 per pound as markets reassessed demand in a potential higher-for-longer rate environment, though analysts noted the metal’s medium-term supply-demand fundamentals remain constructive.

Defence and Healthcare Bounce

DroneShield’s 10% surge capped a remarkable run for the counter-drone technology specialist, which reported transformational fiscal 2025 results in late February. Revenue from customers jumped 276% year-on-year to A$216.5 million, the company swung to underlying profit before tax of A$33.3 million with a 15% margin, and statutory net profit reached A$3.5 million after years of losses. Cash holdings stood at approximately A$209 million with positive operating cash flow, while the sales pipeline expanded to A$2.3 billion across 295 deals in 50 countries. Management disclosed A$104 million in committed orders for fiscal 2026 and announced a major six-contract bundle worth A$21.7 million to a Western military customer. The company is rapidly scaling manufacturing capacity with a new Sydney facility and contract manufacturing arrangements in Europe and the US coming online during 2026.

Telix Pharmaceuticals gained 6.54% despite a challenging 12-month period that has seen the stock fall roughly 56% from its peak. The radiopharmaceutical developer has faced pressure following FDA Chemistry, Manufacturing and Controls deficiencies that delayed approval of kidney cancer imaging agent TLX250-CDx, with brokers guiding for essentially flat earnings and free cash flow through fiscal 2027 as research and development spending ramps. However, RBC Capital Markets upgraded the stock to Outperform in January on valuation grounds, setting a A$17 price target that implies roughly 50% upside from current levels around A$11. The firm cited strong Illuccix prostate imaging sales and revenue guidance of up to A$1.23 billion as evidence the sell-off had overshot fundamental value. Chinese regulators recently accepted a new drug application for Illuccix, opening another major market.

Mesoblast climbed 5.51% as the regenerative medicine company continues to benefit from FDA approval of Ryoncil for paediatric steroid-refractory acute graft-versus-host disease. Early 2026 commentary has focused on Ryoncil sales ramping approximately 60% quarter-on-quarter, improving cash generation, and the potential for a much larger adult market opportunity. US-listed analysts have set price targets in the US$20 to US$24 range for the company’s NASDAQ line, well above current trading levels.

In Short

For the ASX 200 as a whole, Friday’s close at 8,851 leaves the index down nearly 3% for the week but still well above the key 8,700 support zone that has held during previous corrections. Whether this week’s materials-led sell-off marks the beginning of a deeper retrenchment or simply a healthy rotation into oversold names will depend heavily on the trajectory of the Middle East conflict, the path of inflation and interest rates, and the willingness of global investors to maintain exposure to cyclical risk assets in an increasingly uncertain world.