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The ASX200 nudged above 7000 again today, only to close a whisker below as we continued to outperform the Asian region. More weakness in the $US overnight underpinned buying amongst the resources sector with Gold finally bouncing (hard) from the naughty corner. Standing back for a moment & reiterating our comments from this morning, the $US has appreciated over +28% in less than 18 months against a wide basket…
MM is making changes to the Flagship Growth & Emerging Companies Portfolio
For most of this year, equities have danced to the bond yield tune, not surprising when we’ve seen such dramatic appreciations but the last few days have seen a number of investors/sectors switch their focus to China, and the $US. Obviously, at this stage, it may be no more than an old-fashioned intermission but MM is looking for the next chapter for stocks to be triggered by a softening $US and bond yields, perhaps the thought of China forgoing its Covid Zero Policy is the catalyst for investors to refocus their attention into Christmas.
A choppy but positive session today, more a lack of conviction on either side of the ledger saw the local index edge marginally higher with the defensive sectors offsetting weakness from the recently strong Energy & Material stocks.
The ASX200 promised so much more than it finally delivered on Monday although it still closed up +0.6%, well above the psychological 6900 area. Both the US S&P500 Futures and local index gyrated around on hopes and fears that China would abandon its damaging Covid Zero policy sooner rather than later. On Friday hope that they were about to reopen their economy sent stocks, and especially resources, soaring higher but over the weekend comments from Beijing made the optimism appear premature creating a more sombre backdrop for equities.
Futures were pricing a significantly higher open (~90pts) this morning and what we got was fairly lacklustre, particularly outside the commodity complex. Reconfirmation leaking from China that Covid zero policies were not being relaxed as previously implied had US Futures on the back foot which took some cream off the recovery locally. Still, we managed to rally ~50pts (stripping out the impact of dividends) with Material stocks a major beneficiary of a strong move higher in the likes of Copper, Nickel & Gold on Friday night.
Investors were fixated on central banks for most of last week as we saw the RBA, Fed, and BOE all hike interest rates pretty much in line with expectations but on Friday just when people were considering their weekend markets appeared to turn the page to another extremely important chapter:
The local market started on the back foot today, but managed to trend higher into the weekend. The banks battled back off their lows but the index was mostly supported by strength from commodities with Energy and Materials the key winners today with the USD coming off. Despite yesterday’s tumble, the ASX had a strong week, finishing up 106pts/+1.57%, carried by strength in Energy while Real Estate and Staples were the only sectors lower.
Thursday saw the ASX200 get clobbered by the Feds sledgehammer, the index finally closed down -1.8% even after bouncing over 40-points from its intra-day low. The selling was broad-based with almost 90% of the market closing in negative territory as the recent buyers retreated into the shadows following the net hawkish rhetoric from Jerome Powell. However, we believe investors shouldn’t be too alarmed, as we touched on yesterday weakness is common in the 1st half of November.
