Indices: Australian ASX 200
Wednesday saw bond markets shoot higher (yields lower) at 11.30 am after the CPI inflation print came in at 4.9%, well below the forecast 5.2% although it does remain above the RBA’s targeted 2-3% band it’s trending in the right direction. The impact of this dovish number was supported by weak local building approvals, -8.1% compared to expectations of only a -0.5% drop, plus weaker-than-expected US jobs data on Tuesday night i.e. the ducks are beginning to align for central banks.
The ASX200 enjoyed a strong +0.7% advance on Tuesday led by the Materials Sector with the lithium, gold, and iron ore names all enjoying a day in the sun e.g. Minerals Resources (MIN) +8%, Pilbara Minerals (PLS) +5.1%, Gold Road Resources (GOR) +4.6%, and Fortescue Metals (FMG) +3.2%. MM has been bullish on the miners for months looking for a catalyst to increase our sector exposure, we now believe Beijing is delivering the appropriate backdrop as it slowly but surely continues to pull the stimulatory levers:
The ASX200 ended last week less than -0.5% lower with moves again focused on the stock level as companies that missed or beat in their earnings reports/outlooks dealt with uncompromising aggression in both directions e.g. Altium (ALU) +29.5%, HUB243 (HUB) +12.9% and Alumina (AWC) -15.8%, Iluka (ILU) -14.8%, WiseTech (WTC) -14.7%. While Reporting Season starts to taper off, it will still have an influence this week particularly at the smaller end of the market, early on we see results from Fortescue (FMG), NEXTDC (NXT), Mineral Resources (MIN) and Praemium (PPS) all stepping up to the plate in the next 2 days.
The ASX200 edged higher on Tuesday as reporting season dominated local stocks although attention is slowly moving towards Jackson Hole where we hope to get a read into the current mindset of central bankers. While we don’t expect any forward guidance from Powell and Lagarde, they won’t be telling us when/what the next move will be for interest rates, there are likely to be clues as to their current feelings.
The ASX200 commenced the week with another -0.46% fall taking August’s decline to -4% with another 7 trading days still remaining before we commence September, historically the ASX’s worst performing month over the last 31 years.
The ASX200 ended last week down another -2.6% taking August’s pullback to -3.5% with nine trading days remaining. Risk sentiment has been significantly dampened by an ever-hawkish Fed and a Chinese economy that is struggling to regain its “mojo” post the country’s severe zero-COVID policy.
The ASX200 rallied on Tuesday with sentiment buoyed by the PBOC rate cut – the optimism dissipated through the afternoon before vanishing as Spain kicked a phenomenal goal to break the 1-1 deadlock with Sweden. There were some interesting names on yesterday’s leader’s board.
The ASX200 commenced the week with a -0.9% fall courtesy of escalating concerns that the Chinese property sector was again on the precipice after shares in one of their largest real estate developers missed bond payments casting doubts as to their liquidity and potential contagion throughout the sector.
The ASX200 ended last week down -0.3% with the miners weighing on the index i.e. IGO Ltd (IGO) -4.9%, Mineral Resources (MIN) -2.5%, South32 (S32) -2.3%, and Fortescue Metals (FMG) -1.8%. Weakness in the rate-sensitive Tech and Real Estate Sectors also dampened sentiment as markets started to embrace a “Goldilocks” outcome for central banks.
