The ASX200 promised so much on Monday but ultimately delivered just a little as Ukraine tensions came back to the fore as Belarus entered the affray and the West continue to gear up sanctions against Russia – before the ASX even opened US stock futures were down over 2%, gold spiked almost $US40/oz higher and brent crude soared 7%, back above $US105/barrel. MM is looking for a few weeks choppy action across financial markets, which is hardly a grandiose call but if yesterday is anything to go by we feel smack on the money.
- MM is currently looking for brent crude to rotate in the $US100-$105/barrel region for a few weeks following its aggressive 60% rally since December.
- Our preferred scenario is oil ultimately attempts to extend its recent gains towards the $US110 area but we must be mindful in today’s geopolitical environment anything is possible.
- If we are correct by association the likelihood is equities will struggle to meaningfully recover until oil shows signs of topping out.
Monday ultimately saw over 60% of the market close in positive territory but when the influential banks slip lower its hard work for the ASX make a significant advance – the banks probably experienced some profit taking as investors attempt to unravel the impact of banking sanctions around Russia. It might surprise many subscribers to know the ASX200 actually managed to rally over 1% in February even as war broke out in the Ukraine illustrating one of the key themes for successful investing:
- Ignore the noise, focus on the stocks you want to buy and the level where value presents itself and press the buy buttons if / when the opportunity does arise.
Overnight saw US stocks experience a relatively quiet night with the Dow ultimately closing down just 0.7% but the standout was tech reversing to close up 0.3%, the SPI futures are calling the ASX200 to open up around 20-points this morning – it will be interesting to see if the local growth names can finally regain their mojo.
MM remains bullish the ASX while its above 7200
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