When inflation rises it takes interest rates along for the ride which flows down to multiple contraction / a drop in valuations i.e. people are prepared to pay less for a company’s potential growth / yield because they can suddenly get an improving return on their risk free funds at the bank i.e. a major tailwind for stocks has become a headwind
The US literally pumped money / stimulus into their economy after the GFC but the amount pales into insignificance compared to their extreme efforts post-COVID, never in history has the global economy experienced such phenomenal economic stimulus effectively providing “free money” which has fuelled massive M&A and buyback activity in equities
MM believes that company buybacks are close to a point of inflection which should remove an enormous tailwind for stock indices i.e. one of the largest net buyers of stocks may retreat
MM remains mildly bullish Australian equities looking for 4-6% further upside i.e. not a big call but we do anticipate reducing our risk if such a move unfolds
MM is looking for around 10% upside in copper in the coming months but we must remain mindful of how quickly some moves unfolded in 2020/21, in both directions!
The ASX200 fell 1.3% last week, with market sentiment softened by Tuesday’s Budget and disappointing trading updates from ASX heavyweights CBA and CSL - as the saying goes, the trend’s your friend, with the previous market darling CSL, now down -43%, in 2026. As we all know, the budget played a dominant role last week, with the influential “Big Four Banks” retreating by an average of close to 6% on fears around Australia's pivotal housing market. It’s a good job the big miners enjoyed a great week, despite surrendering some of their gains on Friday. BHP Group (ASX: BHP) and RIO Tinto (ASX: RIO) posted fresh all-time highs, both advancing +4% by Friday's close.
The ASX finished the week on a softer note, with the index dragged lower by a sharp reversal in the miners following a strong run in commodity-linked names. Materials had been the market’s engine room recently, helped by record highs in copper and gold, but profit-taking arrived today as copper eased on signs higher prices are starting to bite into Chinese demand, while gold also softened as traders reassessed the outlook for US rates following hotter inflation data during the week.
The ASX200 continued to feel soggy on Thursday, although it did ultimately reverse earlier losses into the close, ending the session up +0.1%, even though ~55% of the main board retreated. A bounce by the banks, led by Commonwealth Bank (ASX: CBA), combined with another positive session by BHP Group (ASX: BHP), was enough to see the main board eke out a small gain, with the index again attracting buyers around the 8600 level, albeit in a very selective manner.
The ASX snapped a 4 session losing streak today and although the market lost momentum through the middle of the session, buyers gradually re-emerged into the close with the index finishing modestly higher.
The ASX 200 retreated for its fourth consecutive day on Wednesday, ending the post-budget session down 0.5%, courtesy of a -10.4% plunge by Commonwealth Bank (ASX: CBA), which took almost 100-points off an index that only closed down 40-points.
The ASX slipped for a fourth straight session today as a sharp selloff in CBA following a softer quarterly weighed heavily on the broader market, with the market also digesting the implications of last night’s Federal Budget and its proposed changes to negative gearing and capital gains tax concessions.
The ASX 200 retreated 0.4% on Tuesday, ahead of the Albanese - Chalmers budget which had mostly been leaked. On the stock/sector level the story pretty much remained the same, with over 65% of the main board retreating and the miners unable to support the fragile ASX.
The ASX was weaker today, with the market unable to follow a stronger offshore lead as investors turned more cautious ahead of tonight’s Federal Budget. Lots of leaks in recent days and suffice to say, this will be one of the more important budgets in recent memory with the ALP fiddling with capital gains tax.
The ASX 200 delivered another disappointing performance on Monday falling 0.5%, failing to embrace another record breaking session by US equities on Friday night. The day was dominated by another painful downgrade by CSL Ltd (ASX: CSL) which saw the biotech hit 16%, its largest ever 1-day fall, contributing over 70% of the days decline - such was its dramatic fall that it overtook talk of tonight’s budget on many trading desks.
The ASX started the week on the back foot today on renewed concerns around the Middle East conflict after President Trump rejected Iran's latest peace proposal over the weekend sending oil prices higher again.
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