The ASX200 closed out August in a very similar fashion to much of the previous 6-months i.e. dipping into a mid-morning low before rallying steadily throughout the day. The steady buying was broad-based with almost 70% of stocks advancing although it again felt more like a lack of selling as opposed to an ongoing scramble for risk assets – it’s no great surprise the buying feels more restrained when we consider the ASX200 has already surged 1115-points / 17% from the first week of May. No change to the MM view, we remain bullish but a few months consolidation as was witnessed this time last year wouldn’t surprise and feels almost overdue.
With another exhausting reporting season finally concluded its time to consider where MM wants to be invested as we head towards our 2nd COVID impacted Christmas, fingers crossed this one’s a lot more relaxed than last year. Let’s take a quick look at the ASX200’s 11 sectors so far in 2021 remembering the index has already rallied +14.4% calendar year-to-date:
Winners: Financials +22.6%, Consumer Discretionary +22.4% and Telco’s +21.4%.
Neutral: Healthcare +14.4%.
Losers: Consumer Staples +12.7%, Real Estate +12.6%, Industrials +10.9%, Materials +8.1%, Information Technology +7.9% and Energy -7.6%.
I feel a number of subscribers would be surprised by the above breakdown, sure we all know the banks have enjoyed a strong 2021 but I doubt many would have put the Materials and IT stocks at the back of the pack but a few sorry tales under-the-hood quickly crystalises their struggles e.g. In the Materials: Both gold stocks and Fortescue Metals (FMG) are down while heavyweight BHP Group (BHP) and RIO Tinto (RIO) have rallied less than 8% while the IT picture is far worse in places with Appen (APX) and Nuix (NXL) down over -50% joining well over 40% of the sector in the red for 2021.
US stocks slipped slightly overnight with the S&P500 down -0.1% in a very quiet session to end August as investors felt afraid to chase stocks higher with valuations already around the highest since the year 2000. The SPI futures are pointing to a drop of around 30-points for the ASX200 early on this morning with no obvious sector leads from overseas.
MM remains bullish the ASX and keen buyers of pullbacks
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