The ASX200 has experienced an extremely volatile start to 2022 having already traded in a 3.7% range as banks and resources fared well while tech stocks were clobbered, we believe investors should be prepared for more of the same from a performance perspective and if we are correct the recovery trade will regain some momentum as Omicron fades away, just as it has in South Africa – fingers crossed!
As we often say at MM “don’t fight the tape” or “flow of money” hence when we consider where the money has been allocated over recent weeks the relative sector performance should be no surprise i.e. for the week into January 5th :
- Investors sank $US19.01bn into global equities although noticeably down from the $US29.45bn in the previous week.
- Financial funds attracted $US1.21bn and healthcare $564mn while tech saw an outflow of $US303 making it the 3rd straight week of selling.
The minutes of the last Fed meeting released on Wednesday stopped the equity rally in its tracks, at least short-term, as the Fed Chair Jerome Powell pointed to a faster than expected increase in official interest rates – tech stocks as would be expected were hit as bonds sank sending yields higher.
MM still remains cautiously bullish the ASX targeting fresh highs in Q1
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