18/06/2024 09:22

Is China’s economy in worse shape than we thought?

China's housing crisis deteriorated in May, triggering further calls for Beijing to support the important economic area. Yesterday's data was the worst since 2011. The property market has weighed on China's economic growth for years, and yesterday saw declines in real estate investment and home prices gather pace. Also, industrial production missed expectations for May, rising 5.6% from a year earlier but slowing from April. The only encouraging light on Monday was Retail Sales improving faster than expected, but the net result is China is still experiencing a weak economic recovery, with Beijing needing to step up if it's going to achieve its 5% growth target.

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12/06/2024 09:16

Global Markets

US equities closed at all-time highs last night, taking no notice of the negative leads from Europe and China, although a more than 7% pop by Apple Inc (AAPL US) certainly helped the bulls. The S&P500 and NASDAQ both trading at highs is a positive backdrop considering the overall market has prepared itself for a little bit of a hawkish message from the Fed — not necessarily that they’re going to raise rates, but just that it’ll take longer to bring rates down, i.e. back to higher for longer.

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20/05/2024 09:10

First Up

China has pulled more stimulus levers over the last few days, and although they are targeted, as was previously flagged by Beijing, it does feel like Xi Jinping has drawn a line in the sand after recent economic data signalled the need for urgent action. The property sector, once an integral driver of economic growth, is still struggling with prices for new homes across 70 cities having declined for the last ten consecutive months after falling 0.6% in April, with property investment down a whopping -9.8% in the 1st four months of 2024 compared to last year. April's fall represents the fastest month-on-month rate of decline in more than nine years, although interestingly, real estate stocks are starting to bounce.

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13/05/2024 09:17

Equity Indices

The ASX200 rallied +1.6% last week, even after a sharp drop on Thursday when the retail and banking sectors came under pressure. By Friday's close, 10 out of 11 sectors on the main board had closed higher, although 27% of ASX200 stocks closed lower over the five days. This illustrates that we are in a “stock pickers” market after the market's +15% rally from its November low. We anticipate ongoing volatility through 2024, primarily on sentiment ebbs and flows around interest rates.

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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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21/02/2024 09:32

First Up

Yesterday, the Peoples Bank of China (PBOC) announced lenders had cut their 5-year loan prime rate (LPR) by 25 basis points to 3.95%; it was the first cut since June, reaffirming Xi Jinping's intentions to reinvigorate their economy, which the prolonged property crisis has weighed down. This was the biggest-ever cut to the key mortgage reference rate as Chinese banks cut rates to incentivise borrowing; the targeted stimulus will increase the potential pool of buyers as apartment prices continue to slip lower.

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19/02/2024 09:12

First Up

China’s stock market went into its “Year of the Dragon” celebrations with a rare and much-needed bounce, with the index, ahead of last week’s break, up +8.3% from its 5-year low. However, it would be easy for the bears to justify the gains on simple book-squaring ahead of the long break. Still, at MM, we can see something more meaningful brewing beneath the surface, i.e. Chinese stocks are looking for a low after almost halving over the last two years. While there are no concrete fundamental or technical buy signals in place, we continue to believe a ~20% bounce, at the very least, is close at hand.

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07/02/2024 09:22

Global Markets

US indices experienced a choppy and mixed session overnight as investors digested the latest comments from Jerome Powell and along with earnings numbers. The market was braced for disappointment coming into this reporting season, but as is often the case, pessimism was stretched way too far, with over half of the S&P500 companies having reported, earnings are up over 8% year on year, beating analyst expectations by more than 6%, revenue is up over 3% year on year, topping expectations by over 1%.

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22/01/2024 09:01

Equity Indices

The strength being demonstrated by overseas indices may drag the ASX200 to our previously targeted 7650-7700 area, but it's not felt impressive so far in 2024. While the local index holds below the 7460 level, we remain neutral, although our “Gut Feel” is the current advance that can take the index to fresh all-time highs, similar to many of its peers.

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12/12/2023 09:24

Global Markets

Overnight saw US equities recovered from an early lacklustre start to rally through the day with the Tech Sector catching the eye in the winner's enclosure as it made fresh 2-year highs. The S&P500 has started positively in an effort to register its seventh consecutive positive week as investors added to the bullish year-end momentum.

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