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The highest-ever close for the ASX200 today at 7763, particularly impressive with BHP and Woodside trading ex-dividend! Strength was broad-based, more than 150 stocks in the 200 closed higher as we continue to bask in the glory of a supportive economic and monetary policy scenario, for now at least!
We are adding a new stock to the Emerging Companies Portfolio
The insurance sector discussed in an MM report last November has largely followed our expected path, albeit in a slightly more positive fashion, i.e. cautiously bullish. The performance of the major companies in the local sector has generally been strong, with three of the names up ~10% or more year-to-date. However, interest rates are only one piece of the puzzle as premiums continue to rise well ahead of inflation, e.g. in February, Suncorp (SUN) slugged consumers with a 16% price increase on car insurance in an effort to increase margins, while this week has been all about private health premiums rising by over 3%, the largest annual increase since 2019 – it’s not surprising that an increasing number of Australians are experiencing financial stress.
A solid effort from the ASX today given weakness in the US overnight (Dow -404pts) however SPI Futures had implied we’d do better, with the ASX finishing in the green and ~30pts above the early lows. The direction of least resistance is still up with the missing piece just the miners…
We are making several changes to the Active Growth Portfolio
US indices fell for a second day as profit-taking washed through the “Magnificent Seven”; the NASDAQ closed down -1.8% while the Russell 2000 (small cap) index fared better, finishing down just -1%. Apple Inc (AAPL US) tumbled 2.8% after reports that iPhone Sales had plunged 24% in China, while Tesla (TSLA US) -3.9% and Microsoft (MSFT US) -3% also struggled, both actually underperforming Apple. Outside of technology, Target Corp (TGT US) popped +12% as another retailer beat earnings estimates. Even Bitcoin experienced some profit-taking overnight after posting a fresh all-time high above $US69,000. The cryptos intraday ~10% swing demonstrated it’s not an asset class for the faint-hearted.
A choppy session for the ASX although it traded in a tight ~30pt trading range overall with Lithium stocks giving back some recent gains on two pieces of negative news, while Gold equities enjoyed the breakout in bullion prices.
As global equities continue to post new all-time highs, we have to embrace the bullish trend until further notice; from a technical perspective, the MSCI World Index is in a “buy the dip” cycle unless we see a break back below the 3150 level, or just over 6% lower. Many investors, including ourselves, thought equities might struggle to add to their late 2023 gains, but the grind higher has been unrelenting, and as the likes of the Nikkei and Bitcoin have demonstrated, there’s plenty of money looking for a home, remember the more than $US2.5 trillion in cash reserves being held by private equity looking for an opportunity, enough money to buy the ASX200!
The ASX hit record highs early on before some profit-taking kicked in mid-morning. Selling was pretty benign with the index falling around -0.4% from highs to the close driven by softer Business conditions data which showed a larger than expected fall in inventories in Q4, likely to weigh on GDP growth. Small caps continued their push higher though, the Small Ords closing at a new 52-week high today.
In early February, one of the most dominating stories in the financial news was the plunging lithium price and demise of the related stocks. Less than 2-years ago, analysts were extrapolating huge demand for EVs over the decade ahead would continue to push the required materials, such as lithium, cobalt and nickel, ever higher, generating huge profits for the related miners, but as we now know, the demand for EVs has fallen short of estimates, especially in the influential US, which combined with increasing supply of lithium drove down prices over 80%, i.e. in this case making the market not wrong, but very wrong! However, all good things usually come to an end and in the case of the lithium “shorters” last week was a tough one, with heavyweight Pilbara (PLS) bouncing +19.4% taking it up +10.9% year-to-date.
