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A positive session for the ASX, its fifth in a row with the market bouncing well from the bottom of its trading range as pressure on bond yields eased underpinning broad based buying across equities, 75% of the main board finished up on the session and no sector finishing down.
Tuesday was a strong day for local stocks, with over 85% of the main board closing higher with all 11 sectors contributing to the solid gain of just over +1%. Utilities and Tech stocks were the best on the ground, with the latter closing up over +3%, while the lithium names also finally found some love, Pilbara (PLS) surged over 6% after Citi upgraded a number in the space, including PLS, Core Lithium (CXO) and IGO Ltd (IGO).
A solid session for stocks today, buoyed by a positive overseas lead along with further local data that suggests price pressures are easing taking the pressure off inflation and thus interest rates. All sectors finished higher on the session with 85% of the main board ending in the green, pushing the ASX 200 back up through 7000, all the more impressive given our two largest sectors lagged the broader advance.
We wouldn’t attempt to guess how the horrendous situation in the Middle East will evolve over the coming days/weeks, but I’m sure everybody will be hoping for a quick resolution without much further loss of life. Unfortunately, it’s a very difficult and tense situation that may see Israel rapidly push back Hamas and regain control of their territories, but it’s unlikely to end there with a potential invasion of Gaza on the cards while the neighbouring countries hope for Israel to fail – whatever the outcome we feel the region will carry a renewed “risk factor” for many months to come.
The ASX was higher today (+16pts), though it finished up less than SPI Futures (+58pts) had implied on Saturday morning, the atrocious attacks by Hamas within Israel over the weekend that left hundreds dead has created another level of complexity, leading to higher Oil & Gold prices across Asia today, while we all hope and pray for a quick resolution, it appears unlikely.
The ASX200 was set to pop back above 7000 this morning following a very impressive Friday session on Wall Street, which saw stocks shrug off a very strong non-farm payrolls number (employment data). Obviously, after the events over the weekend, it’s harder to predict what lays in store this morning, but we still believe stocks are looking for, or have found a low, and are set to rally into Christmas; hence, we are “buyers of dips as opposed to sellers of strength” until further notice.
October has started in a very similar vein to September, with the ASX200 already down -1.3% as rising long-term bond yields continue to rattle equities. Over the last week, all eleven sectors closed lower with little respite for the bulls, with the index breaking to fresh lows for 2023, led by weakness in the energy and consumer discretionary names. It was a tough start to the new month for the MM Flagship Growth Portfolio, which holds a few of the standout losers last week courtesy of the aggressive “risk off” sentiment:
Local shares tracked higher into the weekend with the big end of town doing the heavy lifting. Banks were well supported, as were iron ore stocks as China’s Golden week wraps up and reports that the China Mineral Resources Group is getting on the front foot to secure supply for 2024. The Energy rout continued though with oil tumbling this week, a sharp ~8% decline put plenty of pressure on the sector, but’s it’s good from an inflation perspective.
MM increased our position in First Solar (FSLR US) overnight from 4% to 6% into the current market weakness. The move aligned with our current rhetoric that we believe US stocks are looking for a low, and our migration “up the risk curve” is most likely to be executed through increasing existing positions. Following the purchase, we hold 5% cash in our International Equities Portfolio which launched mid-2019 and has enjoyed solid performance since inception, with the intention of opening this portfolio up for direct investment (via Market Matters Invest) this side of Christmas.
Some respite across the ASX today with the market bouncing from the bottom of its trading range despite a fairly brutal night across material and energy stocks, both sectors lagged today but the slack was more than taken up by interest rate sensitive names, property stocks enjoyed the pullback in US bond yields which flowed through to our own bond market today while Tech rebounded nicely from an aggressive 3-week, 13% pullback that has improved the risk/reward materially in the number of the large cap names.
