Archives: Reports
A solid session for the ASX today, particularly in some areas as good results from Xero (XRO) and a ‘less bad; update from Nufarm (NUF) curated some broader optimism. Tech led the gains today, the local market enjoyed a risk-on shift thanks to improved rhetoric around the US debt ceiling discussions.
We are making several changes to the International Equities Portfolio
MM are making some amendments to portfolios
Fertilizer and explosive business IPL fell -7.8% yesterday giving it the unenviable position of the worst performing stock on the main bourse after its 1H23 earnings missed the mark by around 7-10%, weakness in its fertilizer division received the most blame. Earnings were also hurt by floods and the prices of commodities used to make the said fertilizers, not ideal scenarios with both of the these issues uncontrollable by IPL making their earnings harder to predict. This morning we have briefly looked at IPL and a couple of other related businesses which have endured a tough few months to evaluate if its time to start considering these out of favour names – note we have focused more on the fertilizer side as IPL’s explosives division remains solid.
Another weaker session for local stocks today however ‘buyers of the dip’ saw the local market recover over half of its early losses as it tracked a bounce by US futures, influential names such as BHP and Com Bank (CBA) closed well off their respective lows with the banks in particular catching our attention with ANZ closing positive on the day, while the IT sector followed US counterparts higher.
Global central banks maintained their fight against inflation this month with the Bank of England, Fed, ECB and RBA all hiking interest rates, most moves were expected but the rhetoric has remained on the hawkish side which has restrained equities although they are still largely close to their multi-month highs. The minutes from the RBA’s May meeting did stocks no favours on Tuesday as they reiterated that “further increases in interest rates may be required” although such a move would depend on how the economy and inflation travelled through 2023/4. In our opinion a major risk to the “risk on” trade is markets are looking for a central bank pivot leaving plenty of room for disappointment for the dovish investors:
A soft day for stocks with a barrage of economic data that implied the RBA may still raise rates again – which was enough to upset the apple cart. It was interesting to see the more defensive sectors feel most of the selling with 75% of the top 200 finishing under water, while the materials and energy stocks which are more heavily linked to Chinese growth were outperformers…
Tax loss selling involves selling investments that have incurred capital losses in order to “net out” or offset capital gains realised elsewhere during the year, while this can occur at any stage through the financial year investors have a tendency to “clean the decks” into June which by definition can accelerate the decline of stocks who are already under pressure. This morning we have briefly looked at 4 stocks that have endured a tough FY to date with one eye firmly on levels where we believe both value and risk/reward may present themselves.
A solid (~30pt) fightback from early weakness (again) today pushing the ASX 200 into the black by the close. Some corporate activity plus some buying in the recently weak materials & energy stocks supported by an ongoing recovery amongst the REITs offset the drag from the financials with ANZ & MQG trading ex-dividend.
The RBA, Fed and ECB all raised interest rates earlier this month and the Bank of England (BOE) joined the party last week when they hiked rates by 0.25% taking their main bank rate from 4.25% to 4.5%. The BOE also added they no longer expect the UK economy to enter a recession this year, the overall accompanying rhetoric was mildly hawkish although the UK short-dated gilts only ended the week slightly higher.
