The last few months has seen some significant outperformance by the IT Stocks when compared in particular to the resources, a move which has coincided with the fall away in longer dated bond yields e.g. over last month:
Winners : Afterpay (APT) +23%, Megaport Ltd (MP1) +28%, Altium (ALU) +36%, Xero (XRO) +16% and Wistech (WTC) +25%.
Losers : South32 (S32) -2%, OZ Minerals (OZL) -11%, BHP Group (BHP) -4%, Fortescue Group (FMG) -2% and Newcrest Mining (NCM) -8%.
We’ve increased our exposure to the tech sector which has paid dividends so far, the plan is to migrate back to the resources sector in-line with recent reports e.g. we like South32 (S32) ~4% lower. The $US will be an important influence on when we pull this respective trigger but remember stocks often lead and our expectation is the resources sector correction will end when markets start believing the $US has bottomed, as opposed to when its recovery actually tops out.
