Indices: Australian ASX 200
The ASX200 enjoyed a rare quiet day on Monday with the index finally closing up just +0.1%, over 60% of the main board stocks rallied but the banks slipping into the close was enough to limit the advance on the day. The “risk off” theme was again evident as the Energy Sector struggled while the healthcare stocks enjoyed a strong bid across the sector. In line with the significant pullback in global bond yields, we again saw investors nibbling away at our growth stocks but without the conviction being enjoyed by US names i.e. over the last fortnight the NASDAQ has bounced +10.7% whereas the ASX Tech Sector has struggled to make any positive headway.
The ASX200 is down over 300 points in March having already wiped out all of the impressive gains in January and early February, investors now find themselves becoming increasingly nervous toward 2023. At the moment we have a stock market focusing on an unstable banking sector and a looming recession which by definition is weighing on the two most influential sectors in the Australian market. Medium-term we wouldn’t be surprised to see the local index remain within the confines of the last 2 years as we wait to see how well central banks can deal with the post-easy money period.
US stocks experienced another mixed session overnight after initially rallying strongly before indices then reversed before finally recovering as Yellen tried to undo her comments yesterday, the Dow closed up +0.2% while the tech-facing NASDAQ posted a gain of +1.3% – at about 6 am this morning Yellen said that “the US is prepared for additional deposit actions if required”, it appears that she’s been scolded by the powers that be but after watching the relative lack of impact it feels like the damage has already been inflicted on market confidence.
The ASX200 enjoyed a solid 60-point rally on Wednesday as investors weighed up what the Fed would both do & say this morning. Hopes have been rising that the Fed’s interest rate decision and accompanying minutes will address investors’ concerns of a potential meltdown across the global Banking Sector. The rescue of Credit Suisse by UBS had returned some order to financial markets but the interpretation of Jerome Powell’s statement over the next 24-48 hours is likely to dictate risk appetite over the coming weeks.
