The ASX200 took a breather on Thursday after an explosive few days, the market ultimately closed down 0.3% after some late selling in the SPI futures dragged the index into the red but overall it felt like a nothing day with only 54% of stocks closing down. We saw some mixed news towards the Omicron variant but it really felt like investors simply just took a rest after advancing all week:
- The UK government are imposing mild new restrictions to slow the increasing number of new cases which keep registering over 50,000 new cases per day i.e. the UK’s still getting significantly more cases every week than Australia has experienced in total.
- Pfizer have announced that a 3rd vaccine shot will stem the new variant.
Elsewhere in money markets things were also fairly subdued, the $A has stalled around the 71.50 region which is no surprise considering we started the week off below 70c, we remain bullish the “Aussie” initially looking for 75c but a resilient greenback is holding on tight to its 7% gain over the last 6-months. Bond yields have also gone quiet although we have seen the longer dated yields start to edge up faster than the short term rates which is good for banking margins assuming its ongoing.
MM remains bullish the ASX with an ultimate target of around 7700 but if this December becomes a “fizzer” we may struggle to break above 7500 as we did in October and November i.e. we see no reason to reduce our market exposure at this stage but we remain conscious that the market has already punched significantly higher since COVID became a household name.
US equities had another mixed session overnight as investors weighed up the economic impact of the Omicron variant with the standout move being a 1.5% drop in tech names. The SPI futures are pointing to a very quiet open this morning in line with the ASX yesterday, no point trying to force things, it feels like there will be far more fireworks at the Gabba than on the ASX as the Poms get hammered in the cricket.
MM remains bullish the ASX targeting fresh highs into 2022
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