Archives: Reports
Reporting season, both locally and in the US, has already started to increase volatility on the stock level, with the majority of companies still to face the music, e.g. winners so far include ResMed (RMD) and Kogan (KGN) & losers Dominos (DMP) and Nanosonics (NAN). However, on the index level, we are still targeting a push to fresh highs by the ASX200, now less than 2% away. It’s important to reiterate that MM is looking to migrate down the risk curve into such a move, but we are only looking to tweak portfolios as opposed to adopting an outright bearish stance.
The ASX200 ended the shortened week up +1.8% and remains on track to post fresh all-time highs in the coming few weeks. Strength came from the most influential market sectors, including the banks/financials, energy, healthcare and resources names. On days when we saw profit-taking in the banks, where Commonwealth Bank (CBA) again posted all-time highs last week, the resources tended to surprise on the upside, i.e. any selling we did see appeared to be more rotational in nature as opposed to exiting the market.
Materials & Energy stocks underpinned the fifth straight session of gains for the ASX heading into the Australia Day long weekend, while our IT sector is failing to mirror strength overseas and Real-Estate was under the pump as Barrenjoey pushed through a bunch of downgrades.
Materials & Energy stocks underpinned the fifth straight session of gains for the ASX heading into the Australia Day long weekend, while our IT sector is failing to mirror strength overseas and Real-Estate was under the pump as Barrenjoey pushed through a bunch of downgrades.
Beijing has announced the PBOC will cut the bank’s Reserve Requirement Ratio by 0.5% effective the 5th of February, the announcement sent stocks in Hong Kong surging up over 3.5% in rapid fashion, its largest daily gain in four months. The move is aimed at stimulating the economy by relaxing lending restrictions as the banks aren’t required to hold as much cash in reserve, a significant move which frees up about $US140bn. As we know, Beijing is also likely to put “pressure” on the banks to put this money to work, which should help their goal of kick-starting the economy.
A choppy session played out locally with the market hot early only to give back the morning gains by the close, a ~60-point trading range and a fair dose of volatility at the stock level thanks to a flurry of company updates, particularly in the mining sector.
The local index triggered a buy signal for MM on Monday when it traded back above 7460, with our ideal target being the 7650-7700 area, suggesting further “risk on” is the order of the day into February. However, it’s important to reiterate that while MM is bullish over the coming weeks, we continue to believe the strong advance from late October is maturing, and we intend to migrate portfolios down the risk curve into further strength.
The market was more bullish today than futures were implying this morning with strength across the resources overlapping bank buying, which is an influential partnership at the index level. Clearly, the market is retaining its bullish bias as more fundies get back to their desks with the least resistance still on the upside – a trend we need to respect for now.
The collapsing nickel price bears a painful resemblance to lithium, both of which are used in EV batteries. However, the surging increase in demand that was anticipated to propel the sector higher has arrived with a relative whimper, while supply has increased unabated from Indonesia in anticipation, with the result being a glut & depressed prices, e.g. the nickel price has halved over the last 12-months. We’re now seeing the likes of Twiggy Forest shutting down Nickel operations his private company Wyloo acquired just six months ago, while BHP is facing similar issues.
A good session today unless you hold Lithium stocks, with the ASX kicking off the shortened trading week on the front foot. Banks offered support at the index level with the Big 4 breaking out of their recent trading ranges and looking strong, while the supermarkets finally found some love and rallied from recent lows – the risk/reward now looking good in that sector.
