The ASX200 closed unchanged on Monday after registering new all-time highs early in the morning only to drift lower throughout the day to ultimately close around the day’s low with almost 60% of stocks closing in the red. Volumes were reasonably low as the local market followed Asian indices and US futures down throughout the session but with no sector moving by much over 1% “ fairly uneventful” was probably the best way to describe the day, assuming you’re not heavily invested in Chinese education stocks – more on that later.
Production reports in the mining sector continues to dominate action under the hood with rare earths stock Lynas (LYC) yesterday’s top performer rallying over +10% after exceeding expectations, quarterly sales revenue was up 3-fold year on year. The miners overall had a good day with Alumina (AWC), OZ Minerals (OZL) and RIO Tinto (RIO) all in the days top 10, a good earnings result by RIO later in the week should give the sector a great platform moving into August. Already this morning BHP Group (BHP) is poised to open up ~$1.60, or 3% as the Energy & Materials stocks noticeably outperformed in the US, while OZL has just released production numbers this morning which were positive. They’re on track to meet their full year guidance plus importantly, they reduced cost guidance by ~5%.
Elsewhere the almost indefinite lockdown facing Sydney is starting to weigh on the travel and tourism stocks with Flight Centre (FLT) threatening to test its 2021 low yet the retail stocks remain largely unaffected implying more stimulus is expected and that it will eventually flow down into consumer spending, especially on-line just as it did in 2020. At MM we’re not convinced it’s going to provide a major leg up for the Retail Sector from current elevated levels and our preferred stance is to be an observer for now.
US stocks edged higher overnight reclaiming the losses of the S&P500 futures during our day with the Energy Sector rallying +2.5% best on ground, the only sectors to decline slightly were Healthcare & IT i.e. the growth names.
MM remains a keen buyer of stocks into pullbacks
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