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A slightly shorter report today as we take a deep breath after our busiest day of the year. As the saying goes, there are two certainties in life: “death and taxes”. At MM, we see it big time with investors taking out subscriptions ahead of the EOFY, a great win-win in our opinion.
The ASX200 closed up +0.3% on Monday, leaving the index up 10% for FY25, a great effort considering the macro-economic and geo-political concerns that have battered stocks over the last 12-months. Yesterday was a relatively quiet session compared to many performances over recent years on June 30, perhaps many participants were exhausted and just happy to rule off their FY25 returns, and consider the school holidays ahead. Only three mainboard stocks moved by over 5% on the last day of June, illustrating the lacklustre end to a tumultuous year. It’s hard to comprehend, with April still fresh in all our minds, but this was the best financial year since COVID.
However, similarly to the US, the strength across the local market has been concentrated in a few areas, with over 35% of the ASX200 closing down for FY25 – remember, as we said yesterday, the S&P 500 is trading almost 20% above its historical valuation yet the majority of stocks are cheap! CBA has contributed an astounding 47% of the index’s gain over the last 12 months; hence, it’s not surprising that MM often reiterates that the market cannot go up (or down) without the banks. With clarity slowly returning to financial markets and rate cuts looming on the horizon, assuming the US enjoys some okay-to-good earnings this month, we see higher prices moving higher. Arguably, the biggest question is whether investors should wade into the momentum or “Certainty Trade”, or is it time to search for bargains in the underperforming pockets of the ASX?
- The higher the market climbs, the more that underweight fund managers will be forced to buy, probably exactly what they don’t want to do.
Overseas markets were mixed overnight, with the US again strong while Europe had a lacklustre performance. The German DAX and French CAC slipped 0.4% and 0.3% respectively. Conversely US indices continued to push to fresh highs with both the S&P 500 and tech-based NASDAQ advancing 0.6% to fresh all-time highs and up around 25% from their April lows.
- The SPI futures are calling the ASX200 to open flat this morning as investors look for new direction in FY26.
Before we consider the broader market through FY25 and into FY26 we thought this was an opportune time to update our view on three main board ASX200 stocks which posted new 52-week highs on Monday.
