The ASX200 punched to new all-time highs on Thursday, ahead of the four-day Easter break, not the move of a bearish/nervous market. Local stocks exited last week, with almost 90% of stocks closing higher on the day, although we shouldn’t get too excited as it was the end of the quarter, a classic time for some “window dressing” by fund managers. MM said a few weeks ago that we wouldn’t be surprised to see a test of the 7900-8000 area by local index this FY, we’re already looking too conservative.
- Our view remains the same, we’re bullish on local equities, but subscribers should remember that the market’s “three-step forwards, two-step back dance” will likely continue this FY.
- Following a mixed Easter period across financial markets, it’s hard to get a read on how stocks will commence trading today, but a strong session by BHP in the US will add a tailwind, while Gold and Uranium stocks should provide pockets of strength.
MM is cautiously bullish toward the ASX200 around the 7900 area
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US equities fell away late in the overnight session after failing to add to optimism following the Personal Consumption Expenditures price index data on Friday – the report showed the core PCE rose 0.3%, below analyst expectations. Fed Chair Jerome Powell said on Friday that the data was along the lines of what the Fed was looking for. However, stronger-than-expected manufacturing data overnight was enough to weigh on the “risk-on trade” as markets experienced another twist towards the likely timing of Fed rate cuts, with buying largely absent in the new quarter, with only the Energy Sector enjoying a solid day at the office.
- As the bull market marches higher, we can see further upside for US stocks through 2024, but surprises remain most likely with the trend i.e. on the upside.
MM remains cautiously bullish towards US stocks
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Chinese stocks rallied on Monday as a rebound in manufacturing activity reinforced hopes that Beijing is achieving some traction in turning the world’s second-largest economy around. The CSI index rose 1.6%, leading gains across Asia after the Purchasing Managers Index (PMI) registered its highest reading in a year, the rally added optimism after the market’s first quarterly gain in 12-months.
- We continue to like Chinese stocks initially targeting a test of the 4000 area, or 10-15% higher, a good read through for local resources.
MM remains cautiously bullish towards Chinese equities
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