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The ASX200 experienced a quiet start to the penultimate week of November which saw winners and losers match each other almost perfectly, the index ultimately slipped -0.2% to add to the consolidation of the market since testing 7200 last week. The ongoing sector rotation continues in a predictable fashion depending on strength/weakness in bond yields and the $US. Yesterday saw the $US kick up almost 1% leading to a very clear group of winners and losers which are likely to be reversed if/when we see the Greenback dip back under 107:
A quiet session to kick off the new trading week with the ASX drifting lower as the day progressed, a lack of interest really which is what we saw in the US on Friday night as well. The defensive sectors did best while the growthier parts struggled.
Novembers Bank of America Fund Managers Survey came out last week and it showed a whopping 92% of the respondents are expecting stagflation in 2023, generally a far worse scenario than a recession because any of the common levers used to reduce inflation will damage further the deteriorating growth and employment backdrop.
A +0.23% bounce on Friday saw the ASX200 sign-off last week basically unchanged after a very quiet week on the index level although as has been the norm through 2022 there were some interesting moves under the hood with 4 stocks rallying by over +10% while 3 fell by more than -15%, I’m glad to say MM avoided the hand grenades this week while enjoying strength from Pendal Group (PDL) +15.5% and Sandfire Resources (SFR) +13.8%. The major ASX copper stocks delivered some newsworthy attention which is likely to be ongoing over the coming week (s):
The ASX brushed weakness seen overseas for the second straight session, ticking higher into the weekend. There were limited catalysts to drive markets today with the path of most pain still seen as being higher as investors are caught short on equity allocations. Industrials and Telcos were the main winners today, the latter dragged higher by heavyweight Telstra (TLS), while a rally in Financials also supported the market. Energy was the weakest of the sectors with oil continuing to slide for now. The ASX200 closed down just -6pts/-0.09% for the week.
The ASX200 rallied +0.2% on Thursday with over 70% of the main board advancing, unfortunately, weakness across the influential resources stocks restrained a generally enthusiastic market e.g. Woodside Energy (WDS) -2.2%, BHP Group (BHP) -1.5%, Sandfire Resources (SFR) -3% and South32 (S32) -5.2%. It’s a touch boring but the story remains the same as the index starts to establish a small trading range between 7100 and 7200. On the stock and sector levels, it’s pretty quiet as December approaches fast, perhaps after a tough year so far fund managers…
The ASX snapped a 3-day losing streak today, managing to brush weakness in the US to trade in the black for most of the session. Commodity stocks were left behind as most commodities were weak overnight and throughout our session, not helped by a bouncing USD. All other sectors closed higher today though, with 5 sectors better than 1% on the day. Consumer sectors, both staples and discretionary, were outperformers on the back of strong US retail sales overnight combined with a handful of better-than-expected quarterlies from US counterparts.
The ASX200 slipped for a 2nd consecutive day on Tuesday failing to embrace decent gains on Wall Street in the process, the banks were the biggest drag on the index with heavyweight Commonwealth Bank (CBA) dropping -1.8% although the broad market was weaker with almost 60% of the main board closing down on the day. The moves by CBA over the last 48 hours sum up the choppy nature of the current market, it advanced $1.38 on Tuesday before falling $1.90 on Wednesday i.e. it delivered a strong quarterly result on Tuesday but after surging +19.8% since July it simply feels tired on the upside.
Another day of consolidation for the ASX, a tight range as stock-specific news dominated, although, a lack of selling from a broader context following a solid ~12.5% rally from the lows on the ASX200 is the clear takeaway.
We started yesterday’s Morning Report discussing Monday’s market of two halves, and 24 hours later Tuesday’s trading session was a similar affair, just with different stocks in the respective winners & losers enclosure:
