The ASX200 is set to open back around 8500 this morning after posting new highs last Thursday and Friday, although in both cases, the intra-day selling following early strength caught our attention. As we’ve said a few times recently, the local market is feeling tired above 8500; hence, we migrated to a neutral stance on Friday, the day the market breached 8600 for the first time. However, as reporting season continues in earnest, there’s likely to be plenty of volatility on the stock level as well as on the index/sector level after the RBA decision/statement – some of the big names facing the music this week include BlueScope Steel (BSL), BHP Group (BHP), Mineral Resources (MIN), Super Retail (SUL), Telstra (TLS), Fortescue (FMG), and QBE Insurance (QBE) – its going to be busy.
We believe the ASX is vulnerable to the RBA decision, with risks of no cut and/or relatively hawkish rhetoric not adequately built into the market. Hence, the risk/reward of buying a short-term dip isn’t as attractive this week as it has been in previous weeks. From an investment perspective, it is pure noise, but we believe there is more chance of the local index hitting 8400 before 8600 in the coming week (s).
- The SPI Futures are calling the ASX200 to open down 0.6% this morning, with the miners likely to start the week off on the back foot – BHP closed down 35c in the US on Friday night.
MM is neutral toward the ASX200
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