Archives: Reports
US stocks closed lower overnight, with an NVIDIA-led sell-off in Big Tech” weighing on the indices, the Dow managed to edge higher, whereas the NASDAQ closed down -0.3%. Under the hood, Bank of America (BAC US) reported strong earnings, but Goldman Sachs (GS US) was a messier result following losses from its investment in the Greensky fintech business. Nvidia led chip companies lower as the U.S. Government looks to tighten restrictions on chip exports to China.
The ASX had a positive session, although finished ~40pts below the highs after the latest RBA minutes showed another rate hike is not off the table. The list of today’s winners is an eclectic bunch with one thing in common, most have had a horrible last 12-months, perhaps some bargain hunting might be about to emerge.
Last week, we saw JP Morgan (JPM US), Citigroup (C USD), and Wells Fargo (WFC US) report robust earnings, although stock gains were relatively muted as investors contemplated what comes next after the sectors enjoyed a period of rising interest rates. Analysts were made to look too bearish as they had expected slowing loan growth to reduce net interest margins (NIM), but so far, things are holding up strongly.
A lacklustre session locally with a smorgasbord of uncertainty playing into investor minds, a -0.35% fall was okay considering the news flow. Energy and material stocks were reasonably well supported, although considering what Oil & Gold prices did overseas, no one got carried away, while technology tracked their overseas counterparts lower.
After a few quiet sessions, crude oil soared +5.7% higher on Friday, ending the week with the same concerns as it had opened on Monday. Investors are bracing for the ramifications of the almost inevitable ground assault on Gaza while, at the same time, the White House announced its first sanctions on companies allowing Russia to sell oil above $US60, the level set by the US and its allies – as we mentioned last week the US is “short & caught” crude oil and will be proactive in keeping the price rises in check as they rebuild their reserves.
With over two weeks remaining, October is back in positive territory, although not in a convincing manner, the index is up +0.03%, while six out of the 11 sectors are higher. Not surprisingly, the Healthcare Sector is down -3.06%, but it probably would surprise most subscribers to know that the Energy Sector is faring worse, down -3.07%, even after the positive blip in oil prices following the attacks on Israel by Hamas – an illustration of why we believe the advance by oil and its related names is maturing fast although they should rally on Monday morning e.g. in the US Exxon Mobil (XOM) rallied +3.2%.
A great note….
We previously considered healthcare stocks a few months ago, with our conclusion a little on the fence – “We believe the Healthcare Sector is likely to enjoy some performance catch-up over the coming months/quarters, although there’s no clear trigger to say the moves yet commenced. “ This potential move clearly hasn’t materialised, and in a similar fashion to the last few years, patience with regard to picking major stock/sector turns is paying dividends. We know from the questions we receive that subscribers often like to buy stocks that have fallen, but we should be mindful that this is not in a rampant bull market where investors are looking to buy any dip, the attitude is more one of caution and “if in doubt keep out”.
A quiet but (marginally) positive session played out in Oz today with the banks and miners supporting the broader index, while the Healthcare sector continues to struggle, news overnight knocking the sector again today. US CPI Inflation due for release tonight will be telling and could dictate market trends from here, just as bond yields are starting to cool.
For months, we’ve been reading that the rising cost of living, whether at the supermarket, petrol pump or higher mortgage repayments/rents, was going to push the economy into recession, but this hasn’t unfolded, although some discretionary spending has been streamlined by the consumer – not a good time to be selling smashed avocado breakfasts. The combination of substantial pandemic savings and a very strong jobs market has sheltered many households, but the latest surge in bond yields is starting to bite, with fixed mortgages having kicked from ~2% to around 6.5%. Unfortunately, we are now in the middle of the largest number of fixed mortgages rolling into painfully higher rates.
