Archives: Reports
The intra-day trend (chart below) shows the impact of low volumes, and as one trader said today, it’s great to see the ASX also celebrates Thanksgiving! Strength early, weakness late but a positive session to cap off a fairly flat week for stocks.
The last 6-months have been tough on a number of classic mainstay ASX defensives as a kick-up by long-term bond yields weighed on a number of names from CSL Ltd (CSL) to Woolworths (WOW) and Transurban (TCL). Obviously, there are more than just bonds influencing the share price of these companies, but their path this FY has some large similarities with the respective charts, almost perfect overlays in a number of cases.
Weakness across resources weighed on the ASX200 today with Iron ore taking a breather from its recent rally and oil markets on the back foot as OPEC uncertainty weighs on Energy markets. Volume was light and is expected to remain so into the weekend given the US Thanksgiving Holiday takes place tonight. With little reason to make a conviction call today and a large portion of the index facing a commodity headwind, the index closed on session lows.
The Insurance Sector caught our attention on a lacklustre day for the ASX, with a number of the main players enjoying a bid, e.g. QBE Insurance (QBE) +2.1% and Suncorp (SUN) +1.9%. This is one sector that generally enjoys higher bond yields as companies hold premiums in fixed interest before claims roll through; hence, with higher yields, this float simply earns more interest. We all know the RBA has hiked rates from 0.1% to 4.35% in around 18 months, providing a tailwind for the sector
The best of it was seen early today with the index pushing up on open, only to lose steam from midday onwards and trickle lower into the close – still, there is not a lot of new impetus to sell the market, and as one fund manager we had lunch with today who looks after $10bn+ said, volumes are becoming tough when moving around the market at size, in other words, it’s paying to be smaller and nimble in this environment.
The ASX200 enjoyed a solid Tuesday on the index level, but with less than 55% of the main board rallying, it was left to the influential big banks and miners to perform the heavy lifting, enabling the index to advance +0.3%. The sectors continue to jockey for position with a performance baton into a Christmas Rally potentially at stake. The last week has seen a clear difference on the performance front, with our preferred scenario being more of the same into Christmas:
Winners: Resources, Tech, Real Estate, and Healthcare.
Losers: Energy, Utilities and Consumer Staples.
A solid session for the ASX today and as John Bowie Wilson (JBW) exclaimed on the desk, the market doesn’t look like it wants to go down! Resources back in favour with some good moves across the sector, particularly in the commodities we like (Copper, Uranium & Gold) which suits current portfolio positioning, while as we alluded to this morning, Tech is starting to look a bit tired.
A year ago, we went overweight the Tech Sector, which, after a few false dawns, eventually proved an excellent value add for portfolios. However, unfortunately, the local market failed to keep pace with the “Magnificent Seven”, i.e. the FANG+ Index hit fresh all-time highs overnight. In contrast, the local tech sector languishes over 35% below its 2021 high. We have now adopted a neutral stance towards US Tech. However, further upside is likely over the coming weeks; we are currently focused on levels to reduce exposure as opposed to increasing.
A quiet Monday to kick off the new trading week with the index failing to live up to the levels implied by SPI Futures on Saturday morning. A tick over 50% of the main board traded higher, however it was a session void of any real impetus in either direction – Banks up a touch, resources mixed and a bit chop-chop elsewhere!
We are making multiple changes to the Emerging Companies Portfolio.
