What Matters Today in Markets: Listen Here each morning
The ASX200 failed to add to Tuesday’s euphoric gains following the RBA’s pause, the index gave back the vast majority of the previous day’s gains with over 60% of the main board closing lower. The financials weighed on the market with the “Big Four” ending down an average of -0.7% while the heavyweight major miners and CSL offered little hope to the bulls. As we keep saying the action is unfolding under the hood as opposed to on the index level, all we need to do at MM is pick the correct stocks, therein lieth the challenge!
China continues to struggle after its strict COVID lockdowns, we didn’t think for one minute they would work but we do believe Beijing will kickstart the world’s 2nd largest economy at some stage in 2023, targeted measures rather than blanket coverage is our bet.
- On Wednesday the Caixin China services purchasing managers’ index was released for May and it showed a decline to 53.9 from 57.1, the weakest print since January and well below the median forecast of 56.2 – a reading below 50 suggests a contraction.
- Interestingly last weekend saw China appoint a new central bank head whose been empowered with the major task of reinvigorating their economy – let’s hope he tries to make his mark sooner rather than later.
The Fed FOMC minutes were released at 4 am this morning and they reinforced rate hike expectations which weighed on US stocks and commodities although the reaction was muted with the Dow falling just -0.4%. This morning the SPI Futures are pointing to a -0.5% dip taking the ASX below where it was before the RBA pause, a recession is back in investors’ minds with bond traders largely pricing in a Fed hike next month.
- No change, over the 2nd half of 2023 we believe further worries of a global recession are likely to provide excellent entry opportunities into the Resources Sector i.e. this view has already been unfolding in 1H of 2023.
This morning we’ve briefly looked at 3 investment platform providers which struggled yesterday after Citi downgraded earnings expectations on both HUB24 (HUB) and Netwealth (NWL) cutting net flow forecasts by 5-10% for HUB & 3-6% for NWL, their bearish view was based on rising term deposits attracting more money and impacting inflows for both companies in the 2H.
- “While we continue to expect net flows to bounce back in (2024 financial year), timing is uncertain, and we assume that flows continue to be weak in (first half),” – Citibank (C US).
