The ASX200 sprang back to life on Wednesday finally closing up 0.7% as the Energy Sector led almost 70% of the market higher, we’re almost half way through January and the main Australian index is down just 5-points year-to-date as the lack of direction over the last 6-months continues unabated. The tech names finally took some notice from the recovery by US names producing the days 2nd best performance with Appen (APX) and Life360 (360) both advancing well over 5%.
Chinese tech has been arguably the best performing global sector over the last 24-hours with stocks rallying the most in 3-months as investors hunted for bargains in the depressed group – a less hawkish Fed was likely a key catalyst. The combination of depressed valuations and percolating discussion that Beijing’s regulatory crackdown may have peaked could reverberate through pockets of our market which have been weighed on by Xi Jinping et al. Our holdings in Alibaba (BABA US) and JD.com (JD US) have both already rallied over 20% from their recent lows and If MM is correct that the $US is set for some downside in the coming months this recent outperformance by Asian tech over the US should have further to unfold.
One move that’s gone largely unnoticed over recent weeks is the plunge by cryptos and mainstay Bitcoin, its fallen well over 40% since its almost euphoric style November high. At this point in time if we were traders MM would be leaning towards being a buyer but the key point to acknowledge is how easily the air can come out of an inflated bubble in markets i.e. QE has been lifting basically all risks assets, especially post COVID, the question today is will tighter liquidity sink all boats as easily as Bitcoin rolled over – we believe the answer is almost definitely in the low quality corner.
Overnight saw a choppy session on Wall Street with the Dow close marginally higher after surrendering earlier gains with the Banking Sector the standout headwind. The CPI inflation read printed in-line with expectations adding to the belief that the Fed will hike 4 times in 2022 although interestingly the $US fell 0.7% on the lack of upside surprise. The SPI is pointing to a flat open by local stocks with the resources likely to again be a standout.
MM remains bullish the ASX targeting fresh highs in 2022
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