US indices rallied overnight, led again by the major tech stocks, the FANG+ Index is now less than 6% below its all-time high, a level we believe will be breached into 2024, although that’s no longer a particularly big call. The NASDAQ closed up another +0.9%, while the Dow only managed to advance +0.2%, with some very different stories under the hood on the sector level, energy and materials struggled while tech and consumer discretionary both rallied over +1% – we expect similar moves locally today after BHP’s dip in the US.
- We believe the Christmas rally has already started, and it should be supported by fund managers’ relatively low exposure to stocks.
MM remains cautiously bullish toward US equities into Christmas
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Crude oil tumbled ~4% overnight, closing at its lowest level since July following some mixed economic data out of China, which also weighed on the overall Resources Sector, i.e. China’s exports have fallen for six consecutive months. Concerns that the Hamas-Israel war could escalate into a broader regional conflict are failing to overshadow macroeconomic influences. The easy money for the bears is behind us, in our opinion, but MM’s preferred scenario is still lower for oil; hence, we still aren’t yet considering re-entering the likes of Woodside (WDS).
- We can see Brent Crude testing the $US75 region into 2024, an encouraging bearish influence on global bond yields.
MM is now neutral to bearish towards crude oil
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