Archives: Reports
A good turnaround from the market today recovering ~50pts from the morning lows to close marginally higher, it feels like it wants to go up with BHP and co the key. If the resources can bounce here we’d be surprised if the market didn’t breakout and look to test ~8000 in short order.
We are amending the Active Growth and Emerging Companies Portfolios.
The ASX food stocks have endured a tough time since COVID significantly underperforming the broad market, which has largely rallied strongly over recent years. However, over the last two months, after plumbing fresh 6-year lows in early 2024, the sectors enjoyed a sharp +23% advance, with only Inghams (ING) underperforming the ASX year-to-date. In contrast, old market favourite a2 Milk (A2M) is leading the charge, having rallied almost +40% so far this year. The risk/reward still looks good around current levels as the sector embarks on a correction of 3-4 years of underperformance, but we are cognisant that the 8000 level has contained the index over the last three years, i.e. now only ~2% away.
A lot of action under the hood today with a mixture of M&A and earnings results. Alcoa lopped a bid for Alumina (AWC) and Aussie Broadband (ABB) had a tilt at Superloop (SLC, while Nanosonics (NAB) was hit on a weak outlook while Kogan (KGN) did the opposite as they continued their post-COVID recovery.
Earlier this month, the Uranium Sector was one of the hottest in town, with Paladin (PDN) and Boss Energy (BOE) both up ~50% after only a few weeks of 2024, but here we are approaching the end of February, and the vast majority of the gains have evaporated in the blink of an eye. US giant Cameco Corp (CCJ US) was the catalyst after reporting its FY23 results earlier in the month.
Last week, the ASX200 was again dominated by the reporting seasons in both Australia and the US; while the broad index edged down just 15-points with plenty of well-known stocks signing off the week with double-digit gains or losses, led by American AI goliath Nvidia (NVDA US) which ended the shortened week up ~10%. It was a relatively quiet week on the economic front, with bonds taking a breather while the Tech Sector rallied +3.3%, aided by the Nvidia euphoria. Conversely, the consumer Staples tumbled -3.4% after the shock weak update from Woolies and the departure of the CEO.
Stocks ended a busy week on the up with reporting season dominating the flow. Overall, results have been good, hard to fault them on aggregate hence the market has remained incredibly resilient around all-time highs, buoyed by overseas indices from the US, Europe & Japan all making new highs. We’ve obviously got a heavier exposure to China that is still struggling economically, however, worth noting the Shanghai Composite is on track to book its 2nd consecutive week of gains and is now up 13% from its mid-month low.
AI is a new and exciting subject that has driven US equities to new all-time highs and has already started impacting most people’s lives, even if they don’t yet realise it – it’s an ever-changing world; only 18 months ago, US tech was struggling as rate rises weighed on growth stocks. Artificial intelligence, or AI, has been brewing as the new megatrend for years, with Nvidia now leading the charge. Unfortunately, the local market has few companies that look likely to mirror the performance of their US peers, but there will still be beneficiaries
Another quiet day at the index level, but a lot happening under the hood as we hit the peak of local reporting season – always a good milestone, and we’re now on the home stretch. Super Retail was one of the first discretionary retailers to signal a slowdown in January and was sold off as a consequence, while Qantas had a volatile day announcing plans to spend big on new plans.
The ASX200 struggled on Wednesday as reporting season delivered a couple of painful misses, but it was a weak few days for iron ore names that weighed the most on the local index, e.g. BHP Group (BHP) -2.4% and Fortescue Ltd (FMG) -3.4%. However, the Consumer Staples Sector took the wooden spoon yesterday, led lower by a -6.6% drop by Woolworths (WOW).
