Archives: Reports
The market’s ongoing belief that the global economy is moving toward an inevitable recession combined with China’s fairly muted growth targets for 2023 has sent energy prices tumbling from their dizzy highs just one year ago e.g. Brent Crude is trading 45% below where it was this time last year. However, we are conscious that stocks often lead major tops/bottoms in their underlying commodity prices, which in turn generally run 6-12 months ahead of the economy hence we are starting to look for clues that “enough is enough” on the downside for the energy complex.
Another positive session pushing the ASX 200 back up through 7000 as a strong bounce back in Energy and steady buying in Materials & Financials underpinned strength at the index level, 70% of the market finished the day on the right side of the ledger as nerves start to calm – for now at least, ahead of the US interest rate decision tonight.
We are making a number of amendments to the Emerging Companies Portfolio.
The US Fed has already hiked its benchmark fund rate eight times over the last year to the current 4.5%-4.75% target band, another +0.25% move is now expected at this week’s policy meeting even with bank failures causing a crisis of confidence in the US & Europe. Inflation hit a 40-year high in the last year and although the central bank’s aggressive monetary policy tightening has started to reverse this major economic problem as we know it has already come at a price with the US witnessing their 2nd & 3rd largest bank failures in history.
As we see aggressive selling wash through equity markets the main question MM is being asked is “should we sell and hide, or be a buyer” with underlying sentiment understandably one of caution. Today we have taken a holistic look at our MM Flagship Growth Portfolio as we look to maintain our outperformance without taking on board undue risk. Today we’ve considered a few snapshots of this portfolio after we used recent weaknesses to deploy some funds across the banks, tech, and miners.
The Sunday night of UBS’s takeover of Credit Suisse helped the market stem losses early in the session, however, the afternoon showed there are still plenty of nerves around the current market and the banking crisis. At midday, the ASX200 was 40pts above its early session low before the sellers returned once most Asian markets opened, all falling in unison to take the index to the lowest level in more than 4 months to close below 6900. Gold was once again the place to hide, making up the bulk of the winners today, though the materials sector still closed -0.79% lower
MM remains fairly comfortable that the regulators will end the current panic sooner rather than later although that doesn’t mean the banks are a “screaming buy” they are likely to take time to regain investors’ full confidence – people love to knock the Australian banks but its times like now where we should feel blessed by their strength and stability.
The ASX200 tumbled another 150 points last week taking this month’s decline to 3.6%, and a painful -7.6% from February’s high, just 6 weeks ago. The “Elephant In the Room” has certainly changed over the last fortnight as we’ve seen the US endure its 2nd & 3rd largest ever bank failures in history with another teeters on the edge, Europe has its own issues with Credit Swiss requiring a $US54bn lifeline to regain some degree of confidence in its futures – the financial system straining at the riskier edges.
