Archives: Reports
Stocks ended a busy week on the up with reporting season dominating the flow. Overall, results have been good, hard to fault them on aggregate hence the market has remained incredibly resilient around all-time highs, buoyed by overseas indices from the US, Europe & Japan all making new highs. We’ve obviously got a heavier exposure to China that is still struggling economically, however, worth noting the Shanghai Composite is on track to book its 2nd consecutive week of gains and is now up 13% from its mid-month low.
AI is a new and exciting subject that has driven US equities to new all-time highs and has already started impacting most people’s lives, even if they don’t yet realise it – it’s an ever-changing world; only 18 months ago, US tech was struggling as rate rises weighed on growth stocks. Artificial intelligence, or AI, has been brewing as the new megatrend for years, with Nvidia now leading the charge. Unfortunately, the local market has few companies that look likely to mirror the performance of their US peers, but there will still be beneficiaries
Another quiet day at the index level, but a lot happening under the hood as we hit the peak of local reporting season – always a good milestone, and we’re now on the home stretch. Super Retail was one of the first discretionary retailers to signal a slowdown in January and was sold off as a consequence, while Qantas had a volatile day announcing plans to spend big on new plans.
The ASX200 struggled on Wednesday as reporting season delivered a couple of painful misses, but it was a weak few days for iron ore names that weighed the most on the local index, e.g. BHP Group (BHP) -2.4% and Fortescue Ltd (FMG) -3.4%. However, the Consumer Staples Sector took the wooden spoon yesterday, led lower by a -6.6% drop by Woolworths (WOW).
A weaker session thanks to a few large index weights disappointing, particularly amongst the resources, however worth noting some strength came through from the intra-day lows as Chinese equities bounced. It may sound like we’re clutching at straws, but there is growing evidence that China will get a handle on its economic woes, and we often see stock prices pre-empt such turning points.
Yesterday, the Peoples Bank of China (PBOC) announced lenders had cut their 5-year loan prime rate (LPR) by 25 basis points to 3.95%; it was the first cut since June, reaffirming Xi Jinping’s intentions to reinvigorate their economy, which the prolonged property crisis has weighed down. This was the biggest-ever cut to the key mortgage reference rate as Chinese banks cut rates to incentivise borrowing; the targeted stimulus will increase the potential pool of buyers as apartment prices continue to slip lower.
Plenty of action under the hood again today with some big moves on either side of the ledger. BHP the big one to report results (inline) while Star (SGR) is in the regulator’s cross hairs again.
Whichever type of coal we look at, the pictures the same, one of panic buying through 2021 and 2022 followed by aggressive selling through 2023, creating huge volatility across the respective coal stocks. As with most commodities, China is by far the world’s largest consumer of coal, and if/when Beijing lifts its struggling economy, the dial will likely edge higher on the demand side of the equation. Conversely, on the supply side of the ledger, new mines are becoming increasingly more challenging/ almost impossible to permit or fund on the global push towards decarbonisation.
The index was little changed today but a lot happening under the hood, more misses than hits today, especially in our universe as reporting season kicks up a notch this week.
China’s stock market went into its “Year of the Dragon” celebrations with a rare and much-needed bounce, with the index, ahead of last week’s break, up +8.3% from its 5-year low. However, it would be easy for the bears to justify the gains on simple book-squaring ahead of the long break. Still, at MM, we can see something more meaningful brewing beneath the surface, i.e. Chinese stocks are looking for a low after almost halving over the last two years. While there are no concrete fundamental or technical buy signals in place, we continue to believe a ~20% bounce, at the very least, is close at hand.
