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First Up

UPDATED 18/04/2023 09:17

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The ASX200 continued its steady ascent towards a fresh all-time high on Monday with the heady milestone now only 3.3% away i.e. a run by the banks into their May dividends and we’ll be there i.e. ANZ, BEN, BOQ, MQG NAB, and WBC all trade ex-dividend next month. The winners won a fairly tight arm wrestle yesterday with the Real Estate Sector catching the eye advancing +1.32% making it the only sector to move in either direction by over 1%.

As expected the “Big 4” banks enjoyed the updraft from their US peers on Friday with their average gain being +0.6% whereas the regionals continued their drift ever lower with Bank of Queensland (BOQ) the worst on the day falling another -1.1% slipping towards fresh 2-year lows in the process e.g. so far in 2023 ANZ Bank (ANZ) has rallied +2.3% while regionals Bendigo Bank (BEN) and Bank of Queensland (BOQ) have fallen an average of -8.9% following the short-lived “Banking Crisis” in the US and Europe i.e. nobodies comfortable holding banks with any question marks over balance sheet strength.

While the valuation elastic band starts to stretch we see no reason to migrate up the banking risk curve into either BOQ or BEN although the time will inevitably come when we start to consider such a switch.
Similarly across the ASX while investors have begrudgingly pushed stocks towards new highs it’s very much been “quality” led as fund managers and retail investors alike remain scarred to be caught long riskier plays when the music stops playing.

So far the ASX200 has already rallied +2.8% in April which is ahead of its average performance even for the 2^nd strongest month of the year but interestingly local stocks and in particular the banks usually squeeze up into early May i.e. the risk/reward might be diminishing for the bulls but considering the markets underweight stance towards stocks we believe the ASX200 is likely to test the 7500-7600 area over the coming weeks.