Archives: Reports
The ASX opened lower to start the day and there was little in the way of buying support for the rest of the session as the index rolled off another ~25pts intra-day. Materials were the main drag on performance with iron ore continuing its slide while Tech was also soft as it gave back some of the recent outperformance with growth concerns weighing on sentiment. Energy went against the grain ahead of the next OPEC meeting, one of only three sectors to trade noticeably higher today.
The ASX200 continued to tread water on Tuesday with no fresh clear leads for investors to key off – the EOFY is looming and considering the plethora of worrying news that equities have been exposed to over the last 12 months our “Gut Feel” is the market could squeeze higher although it’s not a move we would position ourselves for especially with US politicians currently bickering around the debt ceiling.
Some optimism seen early with positive talk around the US debt ceiling negotiations but that seemed to evaporate, with the ASX following Asian markets down the gurgler by the close. Financials & property were solid, but anything linked to the consumer was soft.
Lithium stocks are arguably the sector which has garnered the most attention from subscribers post-COVID with many stocks surging higher as the EV revolution gathers momentum. Volatility as is often the case with “hot sectors” is ever-present but even after regular 15,20 and 40% pullbacks most of the quality names are close to their all-time highs helped by corporate activity breaking onto the scene.
A softer start to the week with banks weighing on the broader index while strength in the IT sector overseas continued to support our local tech stocks, Xero (XRO) a standout again while WiseTech (WTC) continued its march higher.
We are trimming XRO
The Fed has been fixated on inflation over the last year as it hiked Official Interest Rates more than 5% peaking at today’s 5-5.25% target range but we’re finally seeing signs that Jerome Powell et al might stand back and observe the economy for a few months/quarters before raising rates again in 2023:
The ASX200 eked out another small gain last week, finally closing up +0.26% as the sector rotation from value into growth continued unabated even as local 3-year bond yields rallied to their highest close in 10 weeks – we question if the likes of tech can continue to ignore the move in bonds for much longer, especially if it gathers momentum. However, as the EOFY approaches a firm $US and strong earnings from some major tech names have maintained the trend which began in late 2022, last week was a simple case of the “song remains the same” but gains, in particular, became far more stock specific:
The easing of rhetoric around the US Debt Ceiling seems to have lifted markets again today with a broad rally for local shares carrying the index higher into the weekend. 70% of the local bourse closed higher with the Tech sector seeing the best of it for the second day in a row. Financials were the main support for the index while Utilities and Materials were the only sector to close lower. The index added 22pts/+0.31% this week for its second consecutive weekly gain.
The ASX200 rallied over +0.5% on Thursday although again we saw some selling into strength with the market relinquishing ~40% of its early morning gains. Under the hood, we saw over 60% of the market advance with Tech names continuing their march higher, this time helped by the bullish sentiment following a positive earnings report from Xero (XRO) which ultimately closed +8.9% higher, the “tech v Miners” elastic band which MM has been discussing at length recently continues to stretch ever higher.
