The ASX200 has surged out of the blocks to kick off August, following gains by the SPI on Friday it’s poised to open around 7570 this morning, up around 150-points / 2% after just 9-days – remember if we maintain the rhythm of 2021 the index should test 7650-7700 this month. Last weeks gains were broad based with only the Resources Sector closing lower while the combination of strong financials and soaring tech stocks contributed the most to our gains, we believe the banks et al will lead the performance this week assuming Commonwealth Bank (CBA) reports well on Wednesday.
Friday night saw Julys US Employment Data come in significantly better than expected which led to some standout moves across a number of financial markets & equity sectors:
- Both US bond yields and the $US rallied strongly following the very encouraging economic figures.
- Commodities came under pressure as the Greenback rallied with Oil, Gold, Silver and iron Ore all falling, a move which would be expected due to their inverse correlation to the $US.
- Not surprisingly the US Financials rallied strongly while the yield sensitive stocks like Tech and Real Estate had a tough session.
There was nothing unusual with how markets reacted to the Jobs Report, the questions we ask today are firstly, is this the start of another wave of economic optimism which by definition is likely to see a continuation of the moves witnessed in the US on Friday. Secondly, if we are about to see another leg higher by bond yields and the $US where / when should we look to fade the move – sector rotation might be about to shift up a gear.
MM remains bullish equities and a buyer of weakness across most stock market sectors
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