Yesterday saw the ASX200 illustrate yet again that COVID was “old news” with regards to financial markets as it rallied 0.3%, to its highest close in 2-weeks even as new case numbers spiralled – as most people know NSW and Victoria are tightening restrictions from Christmas Eve as the Omicron strain sets new records. The local markets remains stuck to the 7400 level, only 3.2% below its all-time high, dismissing the surging case numbers as no more than a short-term irritant.
Low volumes saw over 60% of stocks rise on Thursday with the Banks, Real Estate and Gold stocks catching our attention but when only 1% of the ASX200 moves by over 5% it certainly is starting to feel a lot like Christmas – even most of our staff took a half day and while we will be keeping an eye on the MM chat please understand any replies are likely to be slower than usual. The MM team is looking forward to delivering our 2022 outlook piece in January but in the meantime 3 points we do expect to discuss:
- We feel the classic economic factors such as growth and inflation will dominate 2022 as opposed to COVID.
- The stock and sector rotation that dominated much of 2021 appears likely to be ongoing through next year.
- Stock indices feel likely to have larger swings than in 2021 which was characterised by a 6-month steady rally followed by the 2nd half of the year simply trading sideways.
US equities enjoyed a strong session overnight with the S&P500 advancing 0.8% taking it to within a whisker of a new all-time highs. The SPI Futures embraced the gains overnight rallying 0.6% effectively putting the ASX200 around 7425 when it opens for todays shortened session i.e. it closes at 2pm – we could well be seeing a stealth like late Christmas Rally unfolding as the holidays commence.
MM remains cautiously bullish stocks into 2022
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