Indices: Australian ASX 200
The ASX200 was clobbered -0.9% after the RBA’s move yesterday, not a great backdrop for a market that was already feeling tired. Tuesday’s sell-off felt indiscriminate and futures-led, surprisingly the rate-sensitive names definitely didn’t receive the brunt of the selling with tech the only sector to close in positive territory although real estate stocks did catch my eye closing lower across the board. The next 24-48 hours are likely to provide a better gauge as to what sectors will move both in/out of favour, as opposed to the brief few hours following the announcement, which Philip Lowe said overnight was ‘a very close call’.
The ASX200 managed to advance +0.35% on Monday although by the close the local index had surrendered well over half of its early morning gains i.e. as we’ve been alluding to of late the markets feeling tired at the moment. The tech stocks were arguably the biggest culprit with most major names opening around their intra-day highs before edging lower throughout the session, in the process totally ignoring the NASDAQ posting fresh 2023 highs on Friday night.
The ASX200 continues to feel tired and although it’s set to rally back up towards last month’s 2023 highs in early May we don’t believe its a “risk on” advance that should be chased in earnest, we continue to believe that value will primarily be added to portfolios through stock & sector rotation.
The last few weeks have seen the $US hold its 2023 low and threaten to recover some of its 12% decline since last September which is indeed MM’s preferred scenario over the coming months. A rally in the Greenback has some significant read-throughs for both the overall market, and more importantly for a number of specific sectors.
This is a market where investors must stand back and form an opinion and position themselves accordingly if we get too close it will feel akin to watching a tumble drier going around & around with portfolio performance likely to suffer as a result of the feeling of nausea! There are numerous opportunities presenting themselves for investors this year even if many feel its too hard and markets are making no sense e.g. with the end of April in sight the ASX200 has produced 32 stocks which are up +20% or more while 7 have declined by the same degree, in other words almost one-fifth of the market has moved by more than 20% while the ASX200 itself has rallied just +4.6%.
As expected the “Big 4” banks enjoyed the updraft from their US peers on Friday with their average gain being +0.6% whereas the regionals continued their drift ever lower with Bank of Queensland (BOQ) the worst on the day falling another -1.1% slipping towards fresh 2-year lows in the process e.g. so far in 2023 ANZ Bank (ANZ) has rallied +2.3% while regionals Bendigo Bank (BEN) and Bank of Queensland (BOQ) have fallen an average of -8.9% following the short-lived “Banking Crisis” in the US and Europe i.e. nobodies comfortable holding banks with any question marks over balance sheet strength.
