19/04/2024 09:15

First Up

The ASX200 rebounded nicely, ending a 5-day losing streak on Thursday; only 65% of the market closed higher, but when the “Big Four” banks join forces with BHP in the winner's enclosure, it's usually good news on the index level. It felt like a busy day under the hood, but only 1% of the main board moved by over 5% as school holidays kept volumes subdued and recent geopolitical and macroeconomic uncertainties kept investors second-guessing what the next chapter will deliver for equities – more on this later.

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18/04/2024 09:03

First Up

Wednesday was a choppy but ultimately non-eventful session, especially compared to Tuesday's aggressive sell-off. The market finally closed down less than -0.1%, with over 60% of the main board closing higher, but weakness in BHP Group (BHP), Commonwealth Bank (CBA) and CSL Ltd (CSL) was enough to drag the index lower. Overall, considering the previous night’s comments from Jerome Powell, the market felt resilient in the face of interest rate concerns.

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17/04/2024 09:32

First Up

Bond markets have been struggling over recent weeks as inflations appeared increasingly “sticky.” Fed members kept telling us their preferred economic path is three rate cuts in 2024, but the futures market is painting a very different picture – a few weeks ago, a rate cut in June was all but pencilled in by traders, now there's only a 50% hope that Jerome Powell will announce a rate cut in July. Bond markets, both at home and in the US, have lost their dovish lustre of late.

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16/04/2024 09:21

First Up

The ASX200 slipped 0.5% on Monday, a far better result than we feared after Saturday's Iranian attack on Israel. Even with over 75% of the main board closing lower, the market was resilient, helped by some solid buying in the influential Resources Sector, which largely offset the broader losses – more on this later. Although Iran's strike may have proved largely ineffective, it has increased geopolitical tensions across the region, which is unlikely to fade away soon. At this stage, local investors continue to consider sell-offs as opportunities to increase exposure to ASX names, with the bull market reticent to surrender ground without a fight.

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10/04/2024 09:25

First Up

Overnight, the influential former Federal Bank of St. Louis President James Bullard said he's expecting three rate cuts in 2024 as inflation moves towards the Feds target even while the economy remains resilient, i.e. the “Goldilocks” scenario for stocks. Bullard’s outlook echoed the Fed’s messaging as opposed to the increasing market expectations that two cuts have become more likely than three, e.g. Treasury yields made new highs for the year on Monday night. Mr Bullard is indirectly quoting the old adage of “don’t fight the Fed”.

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09/04/2024 09:16

First Up

The ASX200 eked out a small +0.25% gain on Monday after promising more early in the session. It was a very mixed day under the hood, although the gold stocks continued to shine as the precious metal challenged the $US2,350 area. Remember what we said on Monday: "Gold now looks on-course to test ~$US2,500 before encountering any resistance.” As we’ve witnessed over recent years, with lithium, uranium and coal, when a commodity gets the bit between its teeth, it can rally far harder and further than most analysts predict, although we must remain cognisant that commodities are cyclical in nature and when the music does stop playing you don’t want to find yourself “hoping” it will again come good, Lithium being the most obvious recent example - it can simply take years to recover!

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08/04/2024 08:44

Equity Indices

The ASX200 slipped 1.6% as it kicked off April with a shortened week. As we’ve pointed out a few times recently, every month of 2024 has delivered an average pullback of around 260 points —so far, April has produced a 169-point pullback, and it's only one week old. Our preferred scenario is that the ASX200 will test at least the 7700 level over the coming weeks; hence, we will likely be patient before putting our slightly higher cash levels back to work.

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03/04/2024 09:17

First Up

Tuesday delivered a fascinating session for Australian investors. A macro arm wrestle unfolded, causing significant action under the hood before the index eventually slipped just -0.1 %. This was a solid performance, in our opinion, considering Thursday's storming session to end the quarter. The bulls welcomed a resurgence in China-facing stocks, while interest rate-sensitive names struggled as the doves pulled back bets on a Fed rate cut in June. We're conscious that over recent years, bonds and stocks haven't walked a different path for very long.

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02/04/2024 09:07

Equity Indices

The ASX200 punched to new all-time highs on Thursday, ahead of the four-day Easter break, not the move of a bearish/nervous market. Local stocks exited last week, with almost 90% of stocks closing higher on the day, although we shouldn’t get too excited as it was the end of the quarter, a classic time for some “window dressing” by fund managers. MM said a few weeks ago that we wouldn’t be surprised to see a test of the 7900-8000 area by local index this FY, we’re already looking too conservative.

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27/03/2024 09:15

First Up

As the market slips into the Easter long weekend, some profit-taking felt evident on Tuesday, no great surprise considering the index has rallied over 15% from its November low. The afternoon selling wasn’t overly aggressive, but as we touched on yesterday morning, the markets are a touch bullish and long; hence, some book-squaring/selling by the weak longs didn’t encounter any significant resistance. One of the main themes of 2024 to date has been the strong getting stronger and often the weak getting weaker, even as the ASX200 forged to fresh all-time highs. A quick glance at some sectors three months into the year tells the tale: remember, the index is up a healthy +2.5%.

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