Archives: Reports
With only 3 trading days remaining of FY23 the ASX200 is sitting up around +8% plus dividends, it certainly hasn’t felt like a standard solid year but when we stand back and look at the chart of the index it’s actually rotated in a fairly tight band for the last 2.5 years – as we keep trumpeting all of the action is unfolding on the stock and sector level.
Some respite from the recent selling today with the market snapping a ~300pt/ 4.1% pullback for the ASX 200 over just 4 trading days, as buying amongst the influential miners and the under-pressure property stocks drove the index higher, 3 days before we rule the books off on FY23. As we wrote this morning, the Australian bourse is up ~8% before dividends, a healthy result if we consider both the economic backdrop and geo-political headwinds in play.
We are amending holdings in the Active Income Portfolio.
MTS beat estimates yesterday sending the stock up +4.7% in the process, the full-year results were solid and slightly ahead of our expectations. The underlying profit of $307.5 million was up 2.6% YoY while the FY dividend of 22.5c fully franked was also better than expected (21.2c) which puts it on a yield of ~6% based on Monday’s close. However, it was the comments from Metcash chief executive Doug Jones that caught our attention, especially when we consider discretionary spending.
The bearish tone on the market continued today with any intra-day rallies being met with selling, though the ASX200 didn’t seem to want to travel too far south of 7100 at the same time either, finishing with a small jump on the close. No sector was down more than 1% today, though 4 sectors closed -0.5% or worse with Utilities the biggest drop but Financials weighing on the index the most.
Over the last few months, MM forecasted that the next market cycle would be one of the increased recession fears and the likes of the RBA, FED and BOE are certainly delivering. We believe the value-growth elastic band has further to stretch although we believe its too mature to chase at current levels i.e. tech stocks can continue to outperform the likes of resources but it’s now likely to be caused by pockets of weakness in the miners as opposed to ongoing runaway strength in tech.
The ASX200 experienced its worst 48 hours in many months to close out last week with waves of selling through the SPI Futures dragging the broad market lower – the ASX200 fell -3.8% from its Tuesday high. The brunt of the selling was born by the Resources and Tech Sectors with the former likely on increased recession fears whereas the latter came under pressure from rising bond yields and some profit taking into EOFY. There were some major names in the losers’ corner through the week while winners were far thinner on the ground e.g. on Friday less than 10% of the main board closed in positive territory,
The third consecutive session of pain for the local market, however, today’s move was felt across the region with Asian markets feeling the pinch. The index was down by more than 100pts late in the day before ticking up slightly on the close, though it wasn’t enough to stop the week from finishing at a new low for the last fortnight. Energy was a clear detractor to performance despite some weaker supply numbers out of the US tonight, instead, energy traders were focused on a slowing global economy while a surprise 50bps hike from the Bank of England overnight didn’t help with confidence.
It would have been very easy to change the structure of today’s report with the elevated volatility in many pockets of the ASX but we opted for 4 stocks that we are considering adding to/buying if we see further weakness over the coming weeks although obviously, this list may evolve depending on news flows and the respective performance of stocks we are monitoring closely and holding in our respective portfolios.
We are amending holdings in the International Equities Portfolio.
