Author: james Carter
If you had invested in Australian large resource stocks over recent years the picture is very bleak, even during a commodities boom (the smaller stocks have generally faired worse!). Below illustrates their clear underperformance against the banks since the highs of 2007- 2008, ignoring any dividend returns that clearly favour the banks. Chart 1 illustrates the massive divergence that has occurred over the last few years:
The ASX200 traded hit its highs early in the session, up 26 points, only to be sold off for the remainder of the day to post a -0.9% decline to 5,487 points. The futures actually fell -96 points intraday.
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The ASX200 had a choppy session today, closing up 5 points, after hitting an intraday high of +17 points.
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The ASX200 closed more-or-less flat on low volumes, adding just 5 points to end +0.1% higher at 5,523.
Both ANZ and Westpac (WBC) traded at all-time highs yesterday, whilst CBA is my far off. NAB remains the laggard, in line with the last 7 years. Interestingly, I can see NAB being the best performer of the big four over the next 5 years. The price action for the banks is unfolding as I have anticipated, but my next call to start selling down holdings is out of sync with the recent years for the ASX200 and a major portfolio change, as I believe investors will start focusing on increasing interest rates in years ahead. I have been quoting the below repeatedly for the last few weeks:
The ASX200 continued its recent strength, closing up 38 points or +0.7% at 5,517, led by the banking sector with ANZ again hitting all-time highs +0.9% at $34.59 and WBC +0.9% to $35.62.
Equity markets can be very fickle and often possess short memories. With both Apple and Facebook reporting this week, we could easily see the villain of the last few weeks become the hero, i.e. highly valued tech stocks. If these two influential stocks report well, I can easily see fresh 2014 highs from US indices – this should especially help our long Seek (SEK) position.
The ASX200 closed well today, up 25 points or 0.5% to 5479 in what was a very quiet session led by the bank sector.
Really bullish, there's more to go in the reflation rally
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