Archives: Reports
On Wednesday, we switched our tech-facing Altium (ALU) position to Ramsay Healthcare (RHC) with the Healthcare operator having sat on our Hitlist over recent weeks. The move reduced our direct/indirect tech exposure back to 13%, still significantly above the market weighting which is less than 4%. We had adopted a bullish and overweight tech position since Q4 of 2023 and this was the first step of MM migrating our Flagship Growth Portfolio to a more in-line market stance now.
The market finally cooled today with a stronger-than-expected March employment report the catalyst which increases the chances of the RBA going one more time, although our expectation is they’ll sit tight at 3.60% come the May meeting.
MM is taking profit on NXT
Healthcare stocks are in the same growth basket as tech without steroid-like volatility. Over the last 5 years apart from COVID rising bond yields has been the bane of the sector leading to sharp corrections in both 2018 and late 2021. However, we believe central banks are close to a rate pivot which should be supportive of healthcare stocks e.g. as we showed earlier the US 2-year yield has pulled back from over 5% to sub 4% in recent weeks theoretically creating a tailwind for healthcare stocks as a whole.
Another solid session for the market today with Tech & Resources doing the heavy lifting, the ASX200 is now up ~450pts/6.5% from the 20th March low hitting a 5-week high, however, we get a major test tonight with US CPI Inflation data to be released, consensus expectations are for 5.1% YoY which would be the 9th consecutive monthly decline from a 9.1% peak in June 2021.
MM is selling ALU & buying RHC
As we often state the ASX moves far more in tandem with the likes of the UK FTSE as opposed to US indices – it’s not rocket science, similar to the Australian market European indices have a larger market weighting of resource stocks as opposed to tech which now dominates most US indices. On the relative performance front, Europe is winning hands down even as war rages in Ukraine e.g. The UK FTSE is less than 2% below its pre-COVID high just above 7900 compared to the US which is -14.5% below its equivalent milestone.
A few scratching their head on the desk around what’s driving the advance, perhaps traders took risk-off ahead of the 4-day break and the rare occurrence of important U.S. economic data being released on a public holiday, or perhaps corporate activity (Newcrest getting bid again) was the catalyst, whatever the case our view has been a more bullish one suggesting that surprises are more likely on the upside – today’s result certainly fit that view nicely!
We are tweaking the Active Income Portfolio
US stocks experienced a mixed session post-Easter with the Dow closing up +0.3% while the tech-based NASDAQ slipped -0.1% but the standout of the night was the market’s strong recovery from a sharp intraday sell-off e.g. the S&P500 eked out a +0.1% gain after initially falling ~0.8% on fears of another rate hike in May. The read-through being the markets are not keen on another rate hike next month but it’s capable of taking one in its stride.
