Archives: Reports
The ASX200 again recovered from early weakness to close up +0.2% although we still saw more stocks decline led by the Energy Sector although the market appears to have got this one wrong following crude oils pop over $US91/barrel last night. This morning may see many short-term players hang on the sidelines ahead of this month’s important inflation data out of the US, the interpretation of which plus next week’s FOMC meeting is likely to set the tone for bond yields over the coming weeks.
A similar trend to yesterday played out today where weakness in the morning attracted buyers, the ASX200 finishing +50pts up from the session lows to end higher ahead of key US Inflation data due out Wednesday.
Investors focused on the future, as is usually the case, with the index closing out August down -1.4%, although it’s important to note the month was weak across global indices. The most prevalent headache for companies this profit season has been escalating costs, so far, these have largely been passed onto customers, allowing companies to defend profit margins, but the question is, can this be continued?
A soft opening by the ASX this morning before data from China that showed recent stimulus is increasing liquidity across their struggling economy prompted buying and the index rallied +58 points from the 11 a.m. low of 7134, to close on the session highs, which is a bullish sign.
Over recent sessions, weakness in the ASX has also been amplified by several heavyweight stocks trading ex-dividend. Subscribers have probably gleaned from reports that September is historically the market’s weakest month since 1992, declining on average over -0.9%, almost twice as bad as the infamous May! However, putting this into perspective, the ASX200 has already fallen over twice its usual decline in September.
The first week of September proved to be a week to forget for the ASX200 as it fell -1.67%, with most of the weakness unfolding over the last three days. The sell-off was broad-based, with 10 of 11 sectors closing lower, with the Materials, Consumer Discretionary and Tech sectors faring the worst. In contrast, only the Energy Sector closed positive edging up just +0.6%. Under the hood, the falls were distorted in places by some significant names trading ex-dividend, but some of the movers which caught our attention over the week are as follows:
Materials were once again weighing on local equities today, resigning the index to a fourth consecutive decline. An honourable fightback late in the day did see the ASX200 finish 20pts above the day’s low, and winners and losers were almost split evenly from a sector and stock point of view. The ASX200 finished down -122pts/-1.67% for the week with Energy the only sector to finish higher.
Yesterday we saw major activity on the share register of Liontown Resources (LTR) which led us to reconsider whether other local lithium names could find themselves in the sights of overseas/local companies looking to grow through acquisition. Half of the lithium mines put on the market since 2018 have been bought by Chinese companies for an estimated $12.3bn illustrating the country’s appetite for global battery metal although future moves may prove far harder with national interests likely to be put ahead of shareholders.
Shares were under pressure from the get-go as strong US economic data overnight put upward pressure on interest rate expectations, downward pressure on the Aussie dollar and an appetite to sell for equity markets. The ASX200 fell for the third consecutive session for the first time since early July, though the final result was impacted by a number of stocks paying some chunky dividends
A 20% increase by the $US against the $A should by definition deliver a major tailwind for the ASX businesses who earn a significant portion of their revenue in $US with the healthcare and miners initially coming to mind followed by some specific industrials. Ironically the Healthcare Sector is enduring a tough year, especially by its standards, while the miners are struggling to capitalise due to uncertainties from China.
