Comprehensive Analysis: ASX 200 Underperformance

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The S&P/ASX 200’s

amid broader APAC market weakness is not attributable to a single factor, but rather a : commodity price volatility, particularly in iron ore, and

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• Current Level:
  ~9,034 as of February 12, 2026
• YTD Performance:
  -2.3% (significantly underperforming global peers)
• Global Comparison:
  Only the Hang Seng (-4.1%) has performed worse among major indices this year [0]

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Iron ore has fallen , with prices trading in the $91-102 range during January-February 2026 [1][2]. This represents a significant technical and psychological level for Australian miners, as prices have declined amid:

• Weakened Chinese demand
  ahead of Lunar New Year celebrations
• Signs of oversupply
  in the global iron ore market
• Lower steel production
  in China, Australia’s largest trading partner
• Forecasts averaging $95/tonne for 2026
  , down from previous expectations [3]

The Materials sector, which comprises approximately (dominated by BHP, Rio Tinto, and Fortescue), has declined on the trading day, making it the second-worst performing sector [0][4].

BHP’s Western Australia Iron Ore business reported realized prices of

in recent negotiations, well below break-even levels for some competitors [5]. This pricing pressure is directly impacting earnings expectations for Australia’s largest miners.

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The Reserve Bank of Australia from 3.60% on February 3, 2026, ending the shortest rate-cutting cycle in the RBA’s modern history [6][7]. This caught markets off guard and has had cascading effects:

1. Financials Sector (-0.80%):
   Australian banks face margin compression as the RBA’s hike is immediately passed through to mortgage holders, but deposit rates remain compressed. CBA economists expect
   one more hike in May
   (to 4.10%) [8]

2. Real Estate Sector (-1.10%):
   Higher rates directly impact mortgage affordability and property valuations

3. Consumer Discretionary (-0.90%):
   Rate-sensitive sectors face reduced household spending power

4. APRA Mortgage Restrictions:
   New residential mortgage lending restrictions from February 2026 add additional regulatory pressure on banks [9]

The ASX 200 , with analysts noting that the surprise hike caught the market positioned for continued easing [10]. The decision was among RBA board members, signaling potential for further tightening.

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Sector	Daily Change	Commodity Sensitivity	Rate Sensitivity
Technology	-1.50%	Low	Moderate
Materials	-1.20%	High	Low
Real Estate	-1.10%	Low	High
Consumer Discretionary	-0.90%	Low	High
Financials	-0.80%	Low	High
Energy	+0.30%	Moderate	Low

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1. Commodity Impact (Materials Sector):
   • Iron ore below $100/tonne creates direct earnings pressure on mining giants
   • BHP, Rio Tinto, and Fortescue account for significant index weight
   • Chinese demand uncertainty remains a structural headwind

2. RBA Policy Impact (Financials, Real Estate, Rate-Sensitive Sectors):
   • Surprise rate hike has repriced Australian rate expectations
   • Mortgage lending restrictions compound regulatory pressure
   • Further hikes expected in May create anticipatory selling

The RBA policy shock appears to be the of the current selloff, as evidenced by the cross-sector nature of the declines (technology, real estate, financials, and consumer discretionary all declining). However, commodity weakness provides a that differentiates the ASX 200 from other developed markets.

The ASX 200’s performance gap against the S&P 500 (+1.8% YTD) and NASDAQ (+3.2% YTD) reflects Australia’s unique exposure to both commodity cycles and domestic monetary policy tightening—a combination not present in most other developed market indices.

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[0] Ginlix API Data - Market Indices and Sector Performance

[1] Bloomberg - “Iron Ore Falls Below $100 as Trade Softens Ahead of China Break” (https://www.bloomberg.com/news/articles/2026-02-06/iron-ore-falls-below-100-as-trade-softens-ahead-of-china-break)

[2] Discovery Alert - “ASX Resources and Commodities 2026: Strategic Investment Outlook” (https://discoveryalert.com.au/asx-resources-commodities-2026-opportunities-trends/)

[3] ING Think - “Iron Ore Heads Towards a Softer Year” (https://think.ing.com/articles/iron-ore-heads-for-a-softer-year/)

[4] Betashares - “Market Trends: February 2026” (https://www.betashares.com.au/insights/market-trends-february-2026/)

[5] S&P Global - “BHP Concedes Pricing Pressure on West Australia Iron Ore” (https://www.spglobal.com/energy/en/news-research/latest-news/metals/012026-bhp-concedes-pricing-pressure-on-west-australia-iron-ore-amid-china-contract-negotiations)

[6] The Guardian - “RBA Increases Cash Rate to 3.85%” (https://www.theguardian.com/australia-news/2026/feb/03/rba-interest-rate-decision-reserve-bank-australia-inflation)

[7] Trading Economics - Australia Interest Rate (https://tradingeconomics.com/australia/interest-rate)

[8] Commonwealth Bank - “Second Hike Likely in May After RBA Lifts Cash Rate to 3.85%” (https://www.commbank.com.au/articles/newsroom/2026/02/commbank-economists-on-the-rba-interest-rate-decision.html)

[9] ABC News - “Banks Face Mortgage Lending Restrictions in 2026” (https://www.abc.net.au/news/2025-11-27/asx-markets-business-news-nov27-2025/106058006)

[10] Rask Media - “ASX 200 Suffers Turbulence as RBA Increases Interest Rates to 3.85%” (https://www.raskmedia.com.au/2026/02/03/asx-200-suffers-turbulence-as-the-rba-increases-interest-rates-to-3-85/)