For our second instalment of MST Access Sector Pulse, we turn our focus to the resources sector, where shifting macro conditions, commodity volatility and changing investor sentiment are creating both challenges and opportunities across the small-cap landscape.

Macro
Markets are balancing improving inflation signals against ongoing geopolitical risks. A softer June US CPI print has pushed expectations for further Fed action toward September/October, while continued Middle East tensions are keeping energy prices and inflation risks elevated. Locally, two RBA rate hikes in 2026 have lifted the cash rate to 4.10%, adding pressure to rate-sensitive small caps and contributing to a more challenging environment for junior resources.

Small Caps
The Small Ordinaries Index has declined 12% year-to-date, giving back part of the strong ~25% gain delivered in 2025 as investors have become more selective. This highlights how quickly sentiment can change across small-cap commodities, even where longer-term fundamentals remain supportive.

Small Resources
The past six weeks have seen a sharp reversal in sentiment for the sector, with early-year leaders in gold and lithium experiencing a meaningful pullback. Gold equities have faced renewed pressure as rate expectations shifted higher and geopolitical risk premiums eased. Gold prices have retraced toward US$4,000/oz, with the VanEck Junior Gold Miners ETF now down 16% year-to-date, reflecting the broader reset across the junior gold sector. Lithium juniors have experienced a similar pullback, falling 20–30% during June as Chinese supply developments weighed on spodumene pricing. Fundamentals remain robust medium-term, and this pull-back may be a window to look at quality small caps, many of which are covered by MST Access Small – Mico cap resources team, view the full stock coverage list here

Commodities
Commodity performance has been mixed, with relative strength emerging across several key markets:
•  Gold: Down ~30% from peak to US$4,000
•  Copper: Holding firm, now around US$6.34/lb, maintaining its gains better than precious metals.
•  Lithium: Sharp June retreat on Chinese supply, weakest commodity of the period.
•  Rare earths: The standout, strong gains since early June with the main magnet REs up at least 10%
•  Iron ore: Broadly steady, pushing back above US$100/t on resilient Chinese demand

To access MST Access research reports, register here.

This post is prepared by MST Financial Services Limited (ABN 54 617 475 180, AFSL 500557) and is general information only. It does not consider your personal objectives, financial situation or needs, and should not be relied on as personal advice. Past performance is not indicative of future performance. Full disclaimers.

https://www.linkedin.com/feed/update/urn:li:activity:7485203766779002881