Indices: Australian ASX 200
The ASX200 delivered another fascinating session on Thursday with 8% of the main board moving by over 5%, with the winners dominating 15-1 it wasn’t surprising to see the index close up +0.8%, even with Commonwealth Bank (CBA) falling another -1.5%. Under the hood, the IT and Consumer Discretionary Sectors were the standouts both rallying +2.7% – interesting to see the interest rate-sensitive stocks outperform in a week when short-term bond yields are making 4-month highs
The ASX200 tumbled over -1% yesterday after Commonwealth Bank (CBA) dragged both the sector and index lower, by the close the “Big 4” banks were responsible for over two-thirds of the main index’s 78-point fall. During the day we saw noticeably large volume through the futures market as nervous investors appeared to move to the sidelines following the market’s +9.6% rally from its early January low – in just 8 trading days the local market has surrendered over 200 points or 3%.
The ASX200 followed US indices higher at the start of Tuesday but from 10.30 am onwards it slowly but surely slipped lower losing almost 80% of its original gains, a couple of big hits on the stock level appeared to weigh on overall sentiment e.g. Star Entertainment (SGR) -13.5%, Ansell (ANN) -8.7% and Breville (BRG) -4.7%. Earnings season hasn’t helped a tired market that’s already rallied +18% from its October low, however, it’s been interest rate expectations that’s weighed heaviest on risk assets over recent weeks, yesterday we saw NAB forecast that the RBA would hike rates up to 4.1% and suddenly we have a new “handle” that is largely being accepted.
The ASX200 slipped -0.2% yesterday but in a similar fashion to US stocks on Friday we saw some buying surface into the close, especially through the futures. While the local market was down all-day only 55% of the main board closed lower although there was a negative undercurrent to proceedings as the Consumer Discretionary stocks continued to struggle, their woes were compounded by a bearish outlook from JB Hi-Fi (JBH) which saw the electronics retailer tumble over 5% – more on this later.
The ASX200 has started to struggle as bond yields turn higher and with the $US looking strong its hard to see the influential Resources Sector rallying short-term hence we are cautious towards the local index.
