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We are selling positions in the Growth and Income Portfolio
Tuesday delivered a fascinating session for Australian investors. A macro arm wrestle unfolded, causing significant action under the hood before the index eventually slipped just -0.1 %. This was a solid performance, in our opinion, considering Thursday’s storming session to end the quarter. The bulls welcomed a resurgence in China-facing stocks, while interest rate-sensitive names struggled as the doves pulled back bets on a Fed rate cut in June. We’re conscious that over recent years, bonds and stocks haven’t walked a different path for very long.
A choppy session to kick off the new month and quarter for the ASX, coming off the back of a very strong period for markets. We provide a broad look at various asset class performance below, while we’ll cover the performance for the suite of Market Matters published (website) portfolio’s in tomorrow mornings portfolio positioning report, headlined by the Active Growth Portfolio that returned 5.82% for March, ~2% ahead of the market.
Gold popped almost $US50/oz yesterday evening, posting another fresh all-time high in the process as investors/traders further digested last week’s market-friendly PCE Index data. The Fed’s preferred gauge of inflation is cooling which suggests the Fed is getting ever closer to cutting rates. The precious metal is also enjoying the added tailwind of powerful Chinese demand and ongoing global political tensions, what’s not to like? Gold has surged ~12% over the last six weeks, and with no near term end in sight for the three bullish drivers mentioned previously, we can see it testing $US2400-2500 before Christmas.
A bullish session to end a positive quarter for equities with the market rallying ~3% in the last month, propelling the ASX200 to fresh all-time highs. Have a wonderful Easter break with family and friends.
Healthcare stocks caught our attention on Wednesday after their +1.3% advance. However, they’ve been a clear laggard in 2024, advancing only +2.1%, while four other sectors have delivered double-digit gains. The potential influence of the new wonder weight loss drug, Ozempic et al., has weighed on a couple of influential ASX names, but with interest rate cuts on the horizon, we question if this underperformance will continue. Another bonus from the sector is its label as a defensive play, a comforting addition to most portfolios with global equities pushing to fresh all-time highs.
The market opened on the back foot this morning before buyers stepped in, aided by softer-than-expected monthly inflation data that underpinned a good turnaround in stocks, particularly from the more defensive areas while IT took a breather.
As the market slips into the Easter long weekend, some profit-taking felt evident on Tuesday, no great surprise considering the index has rallied over 15% from its November low. The afternoon selling wasn’t overly aggressive, but as we touched on yesterday morning, the markets are a touch bullish and long; hence, some book-squaring/selling by the weak longs didn’t encounter any significant resistance. One of the main themes of 2024 to date has been the strong getting stronger and often the weak getting weaker, even as the ASX200 forged to fresh all-time highs. A quick glance at some sectors three months into the year tells the tale: remember, the index is up a healthy +2.5%.
The market is losing some steam, or at least consolidating recent gains as we head into the Easter break. Monthly inflation data for Australia out tomorrow (3.5% exp) ahead of Retail Sales (0.4% exp) on Thursday while Good Friday sees key US personal consumption data that feeds into the all-important inflation picture, alongside a speech by Fed Treasurer Jerome Powell, both while markets are closed. It’s therefore easy to comprehend a lack of conviction on the buy side as stocks flirt with all-time highs.
A number of major ASX200 stocks hit fresh recent highs on Monday, led by heavyweight real estate favourite Goodman Group (GMG) – as we’ve discussed in the past, this is one particular holding we are bullish over the medium term and are “happy to let it run” – MM is long GMG in our Active Growth Portfolio. This morning, we deliberately looked at five stocks, not in MM portfolios, but it was pleasing to see Xero (XRO) and Sandfire (SFR) both continuing to deliver and joining GMG in the winner’s enclosure – note we already looked at Webjet (WEB) earlier in this mornings report hence didn’t cover again.
