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The US Tech Sector continues to follow the MM roadmap like a world-class rally co-driver, through July & August the FANG+ Index corrected over -13% before reversing on cue, however after just 3-weeks the picture has clearly changed with the index retracing over half of the decline and It’s now only 5.7% below July’s all-time high. The Bears might be the most vocal but they’ve been losing the arm wrestle with the more muted Bulls all year. With central banks looking more and more like they’ve reached the pinnacle of their rate hiking cycle it’s becoming increasingly easy to comprehend the rate-sensitive sector rallying to an all-time high into Christmas.
The ASX200 rallied over 200 points in the last few days of August but it was a step too far on Friday as local stocks drifted lower into the weekend, overall a good week that capped August’s decline to just -1.4 %. Obviously, September has started off on the back foot but there are still 4-weeks to go before we can pass judgement as to whether this month will live up to its seasonal poor reputation. The index finally closed up +2.3% last week as we watched the end of the reporting season unfold over the 5 days, all 11 sectors closed up with the consumer Discretionary and heavyweight Materials & Financials leading the charge. A number of underperformers over the last year figured prominently in the winner’s enclosure
US stocks delivered a mixed performance overnight with the S&P500 closing down -0.16% with the Financials -0.4% and Real Estate Sectors -0.75% offsetting gains in tech +0.37% and Consumer Discretionary +0.5%, again! The NASDAQ eked out a small gain registering its 5th consecutive positive day but it still endured its worst month in 2023 falling over -2.1%. New inflation data, core personal consumption expenditure (PCE), came in as expected allowing yields to edge lower which helped the likes of tech on the day – volatility is set to rise in the coming days with nonfarm payrolls due tonight and lower liquidity ahead of Labor Day.
Today marks the end of FY23 reporting, although there will be a few stragglers that come out late, normally with bad news! Interestingly enough, the only two sectors to finish higher during August were discretionary retail (+4.64%) and property (+0.99%), the two sectors that many fingered as having most risk ahead of results! Further still, the defensive/safe Utilities & Staples were the two weakest links, showing the importance of retaining an open mind, particularly in this market.
US stocks rallied for the 4th straight session overnight as economic data continued to signal that the Fed is approaching the end of its current hiking cycle. The S&P500 closed above 4500 while the NASDAQ finds itself less than 3% below its 2023 high, at MM we are still targeting a break of 16,000 in the coming weeks/months by the NASDAQ which is no longer a big call as Treasury yields edge lower with investors taking a “bad news is good” approach embracing that a slowing economy will lead to a more dovish Fed.
Bang! Weak building approvals and a softer-than-expected read on inflation had the bulls charging today, and an already positive lead from the US overnight on weaker jobs data was supercharged by our own soft economic reads at 11.30 a.m., which should see the RBA hold fire from here, making 4.1% the peak in interest rates!
US indices rallied overnight delivering their best performance since June as bond yields retreated with economic data pointing to an end in the Feds tightening cycle. Almost 90% of the S&P500 closed higher led by the “tech mega-caps” as US 2-year treasury yields sank back below 4.9%. US job openings fell by more than expected to 8.83mn, another new 2-year low while consumer confidence fell amid a souring view towards jobs.
The majority of companies have now reported and while we hate using the old cliché, its been better than feared, much like the broader economic outcomes that have played out over the past year which has prompted a more aggressive stance by central banks globally – the imminent recession is getting less airtime and markets are reflecting that. As we’ve written at nauseum over recent months, we’re neutral at the index level but that belies significant action that’s unfolding under the hood, a theme we expect to continue, creating a great environment for stock picking, as long as you pick the right stocks!
The ASX200 rallied +0.6% on Monday despite an average day on the reporting front which saw Fortescue (FMG) -5.1% and NEXTDC (NXT) -2.6% both fall after delivering their earnings numbers/forward guidance. However, on the day there were some very influential names in the winner’s enclosure such as CSL Ltd (CSL) +1.7%, BHP Group (BHP) +1.2%, and Commonwealth Bank (CBA) +1.2% which when combined with over 60% of the main board advancing was enough to send the index higher.
