The ASX200 struggled higher on Monday following an early morning sell-off to finally close up +0.2% courtesy of a stellar performance by the Resources Sector e.g. South32 (S32) +6.2%, Fortescue Metals (FMG) +6.6% and OZ Minerals (OZL) +3.7%. The end of reporting season continued to deliver extreme moves on the stock level with Altium (ALU) missing on margins while Twiggy Forrest’s Fortescue Metals (FMG) delivered a stellar report card leading to a ~20% differential in performance between the 2 stocks in just one day = volatility!
As mentioned earlier the Resources and Energy Sectors sprang back to life yesterday following a sharp appreciation in commodity prices over the last 8 trading days. MM has recently moved overweight the sector in the Flasgship Growth Portfolio through purchases of Independence Group (IGO) and Santos (STO), it’s a shame we just missed OZ Minerals (OZL) into weakness but that’s the inevitable pitfalls of running real money portfolios – its easy to be a hero in the theoretical arena! Importantly we remain bullish the sector looking for fresh 2021 highs for most sector players although it feels a step too far for heavyweights BHP Group (BHP) and RIO Tinto (RIO).
Local bond yields not surprisingly embraced Jerome Powell’s comments from Jackson Hole with special notice taken of his view that interest rate hikes aren’t imminent as the US economy has “much ground to cover” before it reaches full employment. Locally we saw both Australian 3 and 10-year bond yields slip on the statement but both remain well above Augusts low prior to Gladys switch towards a vaccination driven re-opening economy.
US stocks experienced a mixed start to the week with the Financials struggling as bond yields continued to fall while the IT & Healthcare stocks (Growth Sector) not surprising continued to embrace the ongoing tailwind delivered by the Fed from Jackson Hole. The SPI Futures are pointing to another +0.2% gain early on by the ASX200 following the S&P500’s 12th all-time high in August as big tech continues to steamroller the bears.
MM remains bullish the ASX and keen buyers of pullbacks
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