Archives: Reports
A softer session to kick off FY25, though the worst of it was seen early as US Futures bounced thanks to improving sentiment in France, with CAC Futures +2.8% ahead of their open. Materials stocks the standout today, plenty of them look like they’ve found support after a tough 3 months for the sector, with Coal stocks the standout.
The last six months have been an obvious “game of two halves,” that the US Value and Growth Indices illustrate perfectly; the Growth Index has surged over +23%, while the Value Index has edged up just +4.5%, and the broad-based S&P500 signed out to the first half of 2024 up +14.5%. The growth stocks benefitted from the boom in AI and the accompanying surge by the “Super Six,” whereas the Value Index was weighed down by a heavy Materials Sector. However, there’s not a lot of money to make focusing on the last six months; we need to look forward to what comes next. First, here are some interesting statistics which aren’t exciting for the swelling number of bears.
The ASX200 finished the week down 0.4% but still managed to advance +0.9% for June; overall, local equities experienced another choppy week dominated by moves on the stock/sector level. However, while the index appeared to have experienced a fairly quiet week, it was a very different story in credit markets following the hotter-than-expected CPI spring on Wednesday:
A positive session to round our FY24 for the ASX, a year of two halves characterised by considerable divergence across sectors. The strong have grown stronger, with the Financials led by the banks surpassing even the most bullish expectations, while tech was again a standout. Overall, it’s been another solid year at Market Matters, we’ve welcomed aboard a wonderful number of new members, underpinned by solid performance on the portfolio side. We start FY25 with a clean sheet on Monday, and we’ll continue to work hard to deliver for our community of investors. Thank you to all who have taken advantage of our end-of-year offers – we’re thrilled to have you on board.
Today is the final day of FY24. The ASX200 has advanced almost 8%, which translates to above 13% inclusive of dividends. It hasn’t felt that strong since March, but the numbers don’t lie. However, under the hood, it has very much been a game of two halves, with investors pushing winners and valuations ever higher while stocks residing in the “naughty corner” have found it very hard to escape; some examples of performance in FY illustrate the significant polarisation of performance and as we said yesterday, why we love equities, and Active Investing
It was a very bullish day despite the ASX closing lower. Stocks were hit early as the hangover from yesterdays hotter inflation print worked through, however the 10.30am low was met with strong intra-day buying, the ASX 200 rallying +105pts with more stocks actually finishing up than down, plus, much of the property sector traded ex-dividend. Tech led the line, though resources, healthcare and retailers caught our eye for the right reasons.
The hot CPI print on Wednesday caught the market’s napping. Expectations were for 3.8% Year-on-Year (YoY), but unfortunately, it came in at 4.0%. The ramifications for most Australians and equities were clearly on display after the 11.30am data. While the monthly numbers don’t include all components and the RBA gives more weight to the quarterly print, the increase from April’s 3.6% suggests inflation is frustratingly still “sticky” after three consecutive months of upward pressure; concerns are growing that a 14th rate hike by the RBA is nigh.
We are tweaking the Income Portfolio
A choppy session with the ASX ultimately giving back ~50% of yesterday’s advance in part due to a hotter than expected monthly inflation print for May. Expectations were for +3.8% YoY vs 4.0% realised, which saw bond yields meaningfully higher (bonds sold) as the market priced in a greater chance of a rate hike in August (now 30%) & September (now 60%). Aussie 3-year yields were up 17.5bps settling at 4.10% which underpinned a 0.6% rise in the AUD to 66.86c, along with a quick 45pt sell-off for equities
The ASX200 feels poised to breakout on the upside and if were to add a technical caveat to this “Gut Feel” it would simply be while the index can hold above 7780, i.e. from a trading perspective that’s only a 0.7% lower. However at MM we are Active Investors, not traders, hence short term noise is interesting at times but it doesn’t influence our outlook or subsequent positioning. We have noticed, with some frustration, the markets delivered a noticeable degree of performance reversion on the stock level over the last 4-6 weeks, i.e. our Active Growth Portfolio has surrendered some its outperformance. Hence one factor we are monitoring closely is whether 2024 will become a year of two halves from a performance perspective.
