ASX 200 Sets New Record as Materials and Real Estate Shine

July 02, 2025 05:18 PM AEST | By Team Kalkine Media

ASX 200 Sets New Record as Materials and Real Estate Shine — Image source: Shutterstock

Market Drivers: Materials and Real Estate in Focus

The materials sector provided strong tailwinds, rising 1.83% amid a continued rebound from recent lows. Leading the charge was South32 (ASX:S32), surging 5.0%, and Fortescue (ASX:FMG), climbing 3.8%. Investors appear to be showing increased interest in resource stocks amid stabilizing commodity prices and an improving macroeconomic outlook.

The real estate sector also saw renewed interest, gaining 1.77%. Scentre Group (ASX:SCG), a major retail REIT, stood out with a 2.7% rise, reaching levels last seen in September 2024. Expectations of multiple rate cuts by the Reserve Bank of Australia before year-end are believed to be bolstering REIT valuations, giving the sector fresh momentum.

Sector Rotation and Valuation Concerns

While resource and real estate names advanced, the technology sector saw a pullback, dropping 0.73%. This mirrored a global trend where capital is moving away from last financial year’s high-performing tech names. The Dow Jones Industrial Average gained 0.91% overnight, while the Nasdaq declined 0.82%, reflecting this shift.

Despite concerns about elevated valuations—with the ASX 200 now trading around 19 times forward earnings, well above its long-term average—market sentiment appears to be buoyed by clarity on potential rate cuts. Interestingly, financials remained flat at +0.02%, highlighting the strength in non-traditional sectors driving the rally.

Economic Backdrop: Mixed Signals

On the macro front, Australian retail sales rose 0.2% in May, falling short of expectations for a 0.4% increase. Gains were limited to discretionary categories like clothing and department stores, while food-related spending contracted for the first time in 2025.

Meanwhile, the AI Group Industry Index showed continued weakness in industrial activity. However, easing supply-side pressures—evidenced by lower input costs and wages—may support a continued decline in inflation, potentially paving the way for rate adjustments.

As global trade negotiations continue to evolve and with major legislative developments in the US creating potential ripple effects, investors are navigating both opportunities and volatility. Still, the ASX 200’s latest milestone highlights growing optimism across several key sectors.

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.