The ASX200 closed marginally higher on Tuesday as it continued to hover around the 7500 level, the number of winners & losers almost exactly matched with only 1% of stocks moving by over 5% i.e. there was little on the stock level to excite investors following the Labor Day holiday in the US. However on the macro / news level there was a couple of interesting events catching our attention:
- As expected the RBA left interest rates unchanged although they pushed back their bond tapering program until February 2022 because of the hindrance exerted on our economy by the Delta Strain.
- Importunately the RBA believe current lockdowns in NSW and Victoria will only delay, not derail, the Australian economic recovery believing things will bounce back strongly as vaccination rates rise and states re-open their doors.
- Suddenly NSW has enjoyed 3-days of falling COVID numbers as vaccination rates continue to accelerate higher – fully vaccinated now 41.8% & first dose at 74.8%.
The re-opening of Sydney is feeling very close at hand with pubs set to be pouring drinks in a few weeks for the fully vaccinated, although it appears to initially only to be in areas with low infection numbers. The mobile phone will be our vehicle of proof to allow entry with testing of the process due to start in early October, so far so good with most people getting jabbed, life may be back to at least “kind of normal” well before Christmas and holidays even feel back on the agenda for 2022 – for those that haven’t yet looked don’t expect to discover a host of bargains!
Not surprisingly with momentum improving for Gladys et al re-opening plans the Travel & Tourism Sector continues to perform strongly with Flight Centre (FLT) popping over +6% yesterday accompanied by Qantas (QAN) which has now surged +19% over the last month. At MM we believe this trend will continue but the “easy money” is now probably already behind us with stocks never really believing that the Delta Strain would derail the current economic recovery / bull market i.e. we haven’t even experienced one 5% pullback in 2021.
US stocks experienced a very mixed start to their trading week with most sectors closing lower as jitters around reduced stimulus impacting performances in both Europe and the US. A solid session for both bond yields and the $US appear to confirm the markets worries but big tech maintained its strength with Apple (AAPL US) and Facebook (FB US) both rallying over +1.5%, the SPI Futures are calling the ASX200 slip around 25-points early this morning.
MM remains bullish the ASX and keen buyers of pullbacks
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