Wesfarmers Shares Stem the Selling: Is Momentum Shifting?

Wesfarmers shares (ASX: WES) continued to regain lost ground in the final session of September, putting up a 3.04% gain to close the quarter at A$76.61. The move saw WES reclaim a key technical level, leaving us to wonder if the worst of the selling pressure has passed.

The close for WES at A$76.61 marked a meaningful technical recovery, taking the price above its 30-day simple moving average of A$76.37 on the final day of the quarter. That may seem like a narrow margin, but after registering an RSI reading of 16 just two weeks ago, there are signs that pressure is easing. From what was a deeply oversold signal, Wesfarmers’ share price has seen buyers willing to step in, boosting the momentum indicator to a neutral 51.6 by month’s end.

Despite the late bounce, the quarter was hard for holders, with the stock down 15.25% on the period, and even worse from the 52 wk highs at A$94.70.

What Is Driving Wesfarmers Shares?

Looking at recent fundamentals for clues, late August brought Wesfarmers’ FY26 full-year results, which delivered strong headline numbers, as revenue rose 3.4% to A$47.27 billion, net profit after tax climbed 8.3% to A$2.87 billion, and free cash flow came in at approximately A$4 billion. By most measures, these were solid results for a business of Wesfarmers’ scale and diversity, yet management’s commentary on the FY27 outlook flagged softer retail momentum and rising labour cost pressures as headwinds heading into the new financial year.

Markets reacted by trimming their forward earnings estimates, which was enough to see the stock pull back. Then there was a more technical trigger, as WES shares went ex-dividend on September 1 for a fully franked final dividend of A$1.20 per share. Combined with an earlier A$1.50 capital return, the full-year distribution reached A$2.22 per share, representing a 7.8% increase year on year.

While the dividend credentials remain a genuine attraction for yield-oriented blue-chip markets, the mechanical price adjustment on the ex-dividend date amplified the technical selling, contributing to the mid-month RSI collapse to 16. A Dividend Reinvestment Plan update released on September 30 confirmed payment execution scheduled for October 7, providing a near-term catalyst that likely supported the final-day recovery.

This all took place against the backdrop of tricky macro conditions that raised concerns about the consumer. Recent data showed Australian household spending flat in August, with non-fuel spending recording an outright contraction. Sticky inflation and continued hawkish commentary from the Reserve Bank of Australia kept rate-cut expectations off the table, compressing the outlook for discretionary retail spending heading into the Christmas quarter.

The Setup From Here

The technical picture heading into Q4 is looking better than it was at any point during September’s darkest stretch. Reclaiming the 30-day SMA and resetting the RSI to a neutral reading removes the immediate oversold distortion and opens the door for a more stable trading range, provided no new negative catalysts emerge. The A$76.37 SMA now functions as a near-term support level to watch, while the 200 day SMA at A$80.67 represents a formidable ceiling that would provide a strong technical signal if breached.

Bulls will point to Bunnings and Kmart as well-positioned to benefit from consumer trade-down behaviour during periods of household budget stress, yet bears see a 30x earnings multiple that leaves little room for disappointment. The upcoming AGM will be closely watched for clues as to what comes next.

Bull Case: