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Broad-based buying across the ASX today with all sectors up on the session. The impressive run in financials continued – banks all well supported, while Tech followed their overseas counterparts higher. When the ASX peaked in May at 7900, Aussie 3-year bond yields were at 3.84% before running up to 4.1% as expectations changed around interest rates, prompting a ~3% correction in equities. 3’s are now at 3.91% and equities have bounced.
We are adding a new position to the Growth Portfolio & two new positions to the International Portfolio
The US Tech Sector surged to fresh all-time highs overnight, led by a 5.2% surge by Nvidia (NVDA US), the shining light. At the close, the $US3 trillion dollar AI behemoth had a larger market cap than Apple Inc (AAPL US), illustrating perfectly how things change in this rapidly evolving sector. The so-called “Magnificent Seven” should really be the “Super Six”, with Tesla (TSLA US) down 30% year-to-date, having themselves evolved and performed very differently over the last year, hence our consideration of where MM should be invested across the influential space.
A solid session for stocks that recouped yesterday’s decline, although there was significant divergence from a sector and stock perspective, with commodities on the nose while the more defensive Telcos, Healthcare & Staples attracted buying.
Weakness across European indices has started to weigh on global markets ahead of this week’s European Central Bank (ECB) interest rate decision. The ECB is expected to cut interest rates by 25 basis points this Thursday, reducing the main refinancing rate to 4.25%, the marginal lending rate to 4.50%, and the deposit rate to 3.75%. This will be the first cut in many years although Lagarde may have started to wish she hadn’t been so clear with her messaging for a cut in June. The question being asked is what comes next after this historic pivot.
After a reasonable open, the ASX lost its way in a quiet session tracking a similar trend in the US overnight as we await more data around US employment later in the week. Not a lot to latch onto today, other than weakness in Oil thanks to OPEC+, a rise in Gold on $US weakness and a mixed bag from a sector perspective locally.
Solar stocks have roared back into favour this year as the world searches for carbon-neutral energy alternatives. Overnight, we saw Goldman Sachs raise its price target for First Solar (FSLR US), a stock we’ve held since mid-2023. The US powerhouse cited tailwinds from tariffs and data centre demand looming on the horizon, providing further room for the stock to run even after its 80% surge over the past two months – “We remain bullish on the outlook for FSLR and believe several tailwinds could support higher [average selling prices] or potential capacity expansion.”
A positive session to kick off the last month of FY24, with broad-based support across the market, led by Real-Estate & Financials. So far in FY24, the ASX (inclusive of dividends) is up 13%, coming off the back of a 17% gain in FY23, so we’re still in a good patch despite all the negative rhetoric that consistently permeates around markets. While the timing of rate cuts is still up in the air, earnings by in large are holding up nicely and there have been plenty of opportunities to make money from equities over the past few years, which is what we’re all about at Market Matters!
Uranium, the fuel used for nuclear fission, has sprung to the forefront of investor conversation over recent years, sparked by a mammoth 300% appreciation, which began back in 2021. As would be expected, the related stocks have surged accordingly. Interestingly, so far in 2024, when uranium (chemical symbol U) has corrected over 10%, most of the related stocks have kept going. For example, year-to-date Paladin (PDN) is +62%, and Boss Energy (BOE), the “poorer” cousin, is +16%, pretty good returns when the ASX200 is up less than 2%.
The ASX200 rallied sharply into the close on Friday, reducing the weekly decline to 0.3%; it certainly felt far worse on Thursday morning – a classic case of “End of the Month” window dressing. At its worst on Thursday, the local market had pulled back 300 points or 3.8%, but come the close on Friday, it was smack in the middle of its last 4 months’ trading range, hence our current market neutral stance.
