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The ASX200 threatened a classic seasonal May pullback mid-month but a 3.5% pullback was all we got and Friday saw the bears toss in their towels pushing the index up to within 10-points of its pre-COVID all-time high. Under the hood we saw 75% of the market rally with the banks and resources contributing to bulk of the gains while the tech stocks were the only sector to close in the red. The mix of CBA rallying over +11% for the month to its fresh all-time high and the resources appearing to have found a near term low after their ~10% pullback all bodes well for the start of June.
A strong end to the week saw the ASX200 advance 1.5%, breaking to new all-time highs above 8,900. It was only a little over four months ago that the ASX was trading below 7,200, clouded by an aggressive tariff regime implemented by the president of the world’s largest economy. While the tariff situation remains a work in progress, with a deal yet to be signed between China and the US, it has quickly faded from headlines. Deals with other countries suggest the same will happen between the two superpowers, and our view at the time—that huge tariffs simply didn’t work as policy and therefore had to be a strategy—appears to be playing out.
Another strong session to end a positive week for stocks, with the ASX defying a flat session overseas to chalk up a new all-time closing high, above 8900 for the first time.
Two of the most widely held stocks in Australia, Commonwealth Bank (CBA) and Telstra (TLS), both confirmed this week that crowded/momentum trades can be problematic. Meeting earnings expectations when the market is positioned for an upside surprise is simply not good enough.
The ASX hit new intra day highs today, driven by strong gains in Financials and Utilities after upbeat earnings results from Westpac and Origin. Bank stocks followed the WBC result up with CBA the weakest link for a second straight session. Employment data this morning eased concerns of a weakening job market and took some fuel off the fire for a rate cut at next month’s RBA meeting.
The ASX200 suffered at the hands of the banks, particularly CBA, on Wednesday, ending the session down 0.6%; as we often say, the market can't go up without the banks, and in this case, especially CBA, when it tumbles 5.4%.
Equity markets across Asia today surged on news US-China trade tariffs paused for an additional 90 days through to November – it was a different story on the local market.
The ASX200 rallied another +0.4% on Tuesday, embracing the 0.25% RBA rate cut and accompanying dovish commentary. Credit markets are pricing in another 2-3 cuts over the coming 12-months; we think they're being too cautious.
Another new all-time high for the ASX today, buoyed by the expectation that today’s rate cut will be followed by several more; markets now expecting another 3-4 cuts in the next 12-months.
The ASX200 closed up +0.4% on Monday, driven to new highs by a resources sector enjoying a new lease of life; it's already surged +6.7% so far in August. The lithium stocks led the charge following the news that CATL shut down one of the world's largest mines, but on the index level, it was BHP that added the most points, around 30% of the day's 38-point gain. Outside of the gold stocks, the Materials Sector was hot, from lithium to copper, and iron ore.
An interesting session to kick off the week with Lithium stocks roaring as a major mine in China suspended production after failing to extend a mining permit, putting a rocket under the sector which has significant short interest, the implication being more upside looks highly likely.
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