Archives: Reports
European markets bounced strongly overnight, with the EURO STOXX 50 closing up +1.45% as dip buyers waded back into US futures. US stocks rebounded following their worst week since April as investors embraced a stronger Democratic candidate. This enabled them to focus on the looming major earnings reports, with Tesla and Alphabet facing the music on Tuesday. The political news is unlikely to materially impact the market unless Harris can dent Trump’s apparent significant lead, something Biden was unlikely ever to do. By the close, the S&P500 had risen the most since June, with the “Magnificent Seven” up around 2.5% while the small-cap Russell 2000 added +1.7%. Crowdstrike (CRWD US) fell another 13% as the magnitude of the weekend blackout hit home and, of course, the prospect of litigation on the horizon.
The ASX 200 came back and re-tested the prior breakout area today at 7900 (low of 7902), which in theory should provide a decent level of support given it took over 4-months and 4 failed attempts to leap over the milestone, which finally came on the 11th July. While only early days, we may well be seeing the formation of a new trading range, and the risk/reward stacks up to be a buyer ~7900, using 7850 as a point to raise the white flag, given a move through that level suggests the recent run towards 8100 was a false break. All very micro and index-orientated, but important nonetheless to determine whether the general market is in a risk-on or risk-off position. For now, support held, and we saw buying come in by the close.
The ASX200 managed to mildly higher last week, but it certainly felt worse after Friday’s sharp drop, and there is more to come on Monday. While the press rotates its coverage between the largest IT outage in history and if/when Joe Biden will exit the November presidential race, the stock market had its own pronounced rotation underway. As financial markets priced in a Fed interest rate pivot come September, investors decided it was time to rejig portfolios in earnest – something MM has been discussing for a few weeks. On the ASX, we saw the rate of the sensitive/defensive sectors advance, led by real estate, at +1.7%, while the Materials and Tech Sectors dropped 2.2% and 1.8%, respectively. The moves were more pronounced on the stock level
A soft session played out on Friday, with the ASX down 64pts/0.81% at 7971, though we did see a decent recovery from the lows (up around 45pts),perhaps a result of a major IT issue caused by global Cyber Security firm CrowdStrike that impacted many of us, including the ASX. Short CrowdStrike, long Microsoft might be the play tonight!
The Dow Jones tumbled over 500 points on Thursday night, although it’s the only major US index on track to finish the week higher. As we enter the gauntlet of the seasonally weakest two months, there’s room for further downside in the coming weeks, with markets trading at lofty valuations around all-time highs. With stocks already factoring in three rate cuts into January, there is room for disappointment. Ironically, Nvidia (NVDA US) and Meta Platforms (META US) bounced overnight after their recent sharp falls leaving the sellers to focus on the broad market.
Tech was knocked overnight and the trend continued locally today with the rotation out of the hotter stocks, into some of the more ‘boring’ sectors, while property took a breather amidst continued strength in employment which prompted interest rate traders to increase the odds for a hike.
Overnight saw mixed sessions in Europe and across US indices; the UK FTSE edged up +0.3% while the EURO STOXX 50 fell 1.1% as investors anticipate a period of growth-friendly policies and political stability in the U.K. under the newly elected Labour government. Conversely, France continues to deliver uncertainty. In the US, the rotation out of high-flying mega-cap tech stocks into the more rate-sensitive names continued, with the Dow rallying +0.6% while the NASDAQ closed down -2.9%. The Russell 2000 (small cap) index slipped 0.7%, ending its five-day winning streak, which had delivered an advance close to 12% as the market rally broadened out on rate cut expectations.
The ASX200 pushed towards 8100 today, extending July’s gains to 3.8% – so far, trumping July’s average advance of the last decade by 0.8%. While it was a strong session, some selling became obvious late in the day and it wouldn’t surprise MM to see some consolidation play out from here, after a fantastic run.
