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We are adding to our coal exposure across two portfolios.
Both the Fed and RBA have raised interest rates this month as expected, however, the accompanying hawkish rhetoric caught many people calling interest rates close to a peak off guard plus moves were compounded by some recent strong economic data which has stoked the fire that interest rates will both go and stay higher for longer.
The ASX200 surrendered some of its 2023 gains last week finally closing down -1.65% with the 7400 support area suddenly the closest psychological level as the market appears to have simply run out of steam after surging +9.6% from its early January low. Last weeks weakness was broad based with all 11 sectors falling but the largest declines were in the interest rate sensitive real estate, IT and Healthcare stocks whereas the financials who often see improved margins/earnings through periods of rising interest rates were the best on ground, but they still slipped -0.35%. Central banks have again delivered the backdrop which has doused the markets recent mojo:
A soft end to a tough week for stocks with the market down 1.65% across the five sessions – all sectors finishing lower with Real-Estate (-5.77%) suffering most at the hands of the RBA following a 25bps increase in cash rates, but more importantly, they guided for more to come.
The ASX200 fell over 0.5% yesterday courtesy of some broad-based weakness, by the close over 70% of the main board closed lower with all 11 sectors retreating. The main mover on the day was AGL Energy (AGL) which tumbled -10.33% following a weak 1H result and downgrade to full-year guidance, a disappointing combination however overall it was a fairly quiet session that again saw the index traverse the psychological 7500 area.
Stocks pulled back today with 70% of the ASX 200 down and all sectors finishing in the red. Results continue to flow and there is clearly some caution around what comes next from an economic perspective – stocks that have been strong leading into updates at most risk given elevated expectations.
The ASX200 maintained its recent love affair with the 7500 area on Thursday finally closing up +0.35% with the influential financials offering the main support e.g. Suncorp (SUN) +4.6%, Macquarie Group (MQG) +2.6% and National Australia Bank (NAB) +1%. The winners and losers were evenly matched but it was the smaller end of the main index which dragged the chain hence the index managed to post a small gain e.g. Elders (ELD) -5.9%, Healius (HLS) -5.4% and United Malt Group (UMG) -4.1%.
The ASX was higher today as company earnings took over the baton from central banks as the key driver of stocks, and overall, they were positive. The influential sectors of Financials + Materials led the line, a positive combination here rarely leads to a down day at the index level, while Energy stocks bounced back from recent weakness.
MM is switching from CBA into ANZ
Tuesday was all about the RBA and the unexpected hawkish comments delivered by the RBA Governor. Stocks reversed lower in a matter of minutes after the 230pm decision as investors contemplated rates breaking above 4% before Christmas, the ASX200 finished the day down -0.5% on broad-based selling which saw less than 30% of stocks post gains.
