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The market opened lower in line with overseas indices, however, buyers stepped up mid-morning and things turned positive, for a while at least. That was until Philip Lowe came to the parapet at 2.30pm and raised rates by 0.25%, taking the cash rate to 3.35%.
The ASX200 ended Monday down -0.25% following Friday’s weak session on Wall Street coupled with follow-through selling in the pre-market S&P500 futures. The weakness was broad-based with less than 30% of the main index closing in positive territory with the winner’s circle being dominated by the energy and gold names – more on the precious metal later following Newmont’s (NEM US) bid for Newcrest (NCM).
Some fireworks to kick off the trading week with a bid for Newcrest (NCM) by larger global competitor Newmont (NEM US) while 1H23 reporting season is getting underway.
The AFR proudly announced in “Street Talk” yesterday afternoon that $20bn Newcrest Mining (NCM) might be about to receive a bid with the likely suitors being touted as either Barrick Gold Corp (GOLD US) or Newmont Corp (NEM US), either way, all we can say is bring it on! – we hold 5% of our Flagship Growth Portfolio in NCM.
The ASX200 rallied another +65-points, or +0.9%, last week with most of the gains coming on Friday courtesy of the major banks, as most people know Commonwealth Bank (CBA) is now trading at an all-time high. However, while the index is clearly strong the story beneath the hood remains extremely mixed:
Winners: healthcare, tech, building and property e.g. CSL Ltd (CSL) +11.4%, SEEK (SEK) +9.8%, Xero (XRO) +8.9%, James Hardie (JHX) +9.5% and Goodman Group (GMG) +5.2%.
Losers: energy, insurance, resources e.g. Woodside Energy (WDS) -2.2%, IAG Insurance (IAG) -6.9%, IGO Ltd (IGO) -7.4% and BHP Group (BHP) -3.3%.
A bullish day to end another positive week for equities taking the ASX 200 to within less than 1% of its all-time high. Strength across the tech stocks in the US overnight permeated into the local market again today, however what really caught or eye was CSL finally breaking out on a flow of broker upgrades while the Real-Estate sector is now heating up.
We are trimming MQG & selling SEK.
The ASX200 ended yesterday’s mixed session up just 10 points but under the hood, it was a very eventful day even while the market maintained its magnetic attraction to the 7500 area. The interpretation of the Fed’s 0.25% rate hike and accompanying rhetoric delivered some very different performances on the stock & sector level:
The ASX 200 is up nearly 7% in calendar 2023 but is now looking very tired/uncomfortable above 7500. The best of today’s trade was seen early with the index +47pts at the high, hitting 7548, only ~1% from its all-time high, but with BHP down 1.4% on the session and the banks rolling over into the close.
The oil price has been range trading over the last 4 months albeit near the lower level of prices for the last 18 months. The US Energy Sector has significantly outperformed its Australian peers over the last year and although we believe both sectors are now looking tired its MM’s view that better risk/reward is now on offer locally however we’re conscious that in both absolute and relative terms trends have been extending post Covid hence we’re adopting a neutral bias at this stage until the next cycle shows its hand.
