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A softer session for local equities, with volumes still light on the ground despite positive offshore leads, with gold’s relentless rise still clearly in focus with several brokers upgrading their forecasts. We think some consolidation is overdue for local stocks – a healthy reset as we move through October remains our expectation for now.
As we head into October, volatility has started to brew beneath the surface. In the US, volatility on the stock level is testing multi-year highs, and locally, it wasn’t that long ago that we saw the most volatile reporting season in recent memory. And in the last 24-hours, with the infamous October less than one week old, we’ve started to see big moves across stock and commodity markets.
The ASX200 ended last week up +2.3%, with the first three days of October already recouping all of September’s decline. The healthcare sector made a welcome return to the winners’ enclosure, ably supported by the influential miners and banks, while the energy sector was the only meaningful drag on the index. Only a flat week by the heavyweight iron ore miners reined in performance, although their sector peers worked hard to address their slumber, with 18 members of the materials sector closing out the week up more than +5%.
The ASX finished the week strongly, rising steadily through the session with strength in healthcare, tech and consumer names more than offsetting softer trade in energy and utilities.
The ASX 200 surged +1.1% on the second day of October, enjoying its best session in six weeks, as the market appeared to enjoy fresh funds flowing into the major stocks and sectors. Gains took the index back within striking distance of its all-time high as the influential financials and miners lifted the broad market, with 8 of 11 major local sectors closing higher, with energy stocks, real estate plays and health care also notching gains of more than 1% each.
A classic risk-on day for local equities, with investors embracing the dual engine of bank strength and a relentless gold bid. Materials were the clear standout, but the breadth of today’s rally was also impressive, with most sectors participating as the new quarter seemed to attract new $$. Healthcare has been the real index laggard in recent periods but today saw an obvious change of trend with CSL having the biggest influence from an index perspective, up nearly 4%.
After a choppy session, the ASX200 closed slightly lower on the first day of October, with BHP Group (BHP) shaving 17 points off the index, which ultimately slipped just three points. The market seesawed through the day as investors weighed reports of a halt to BHP’s China-bound iron ore shipments alongside concerns over a potential U.S. government shutdown.
The ASX chopped around today, ultimately finishing down a few points with pundits blaming the U.S. government standoff, however we’ve been here before and it rarely creates a large volatility spike – never say never, but it’s generally more about political posturing.
The ASX200 slipped 0.2% on Tuesday after the RBA and Michele Bullock threw a wet towel over the “Rate Cut Party”, although she really only maintained her logical, cautious narrative.
The ASX opened firmer but reversed course after the RBA left rates unchanged at 3.6% and warned that near-term inflation may be stronger than expected, dampening hopes for easing in the short-term.
