Archives: Reports
The ASX200 ended its penultimate week of October down -1.2% with the damage unfolding over the last 2-days hence going into the weekend the market actually felt far worse, however, the market remains up over 200-points for the month – it certainly doesn’t feel like it! Yet again the Energy Sector was best on the ground while the Utilities Sector carried the wooden spoon. We can see the local index remaining in the 6600 – 6800 trading range into next month although we still believe the risks are on the upside.
The ASX limped into the weekend although we did edge marginally higher for the week with two distinctive halves. The bulls were out early with a combination of consolidation in bond yields and strong earnings sending global stocks higher, before Fed officials refocused attention back on inflation and interest rates sending bond yields to new cycle highs.
The ASX200 fell over -1% yesterday on broad-based selling which saw over 80% of the leading index close in the red, only the Energy and Financial Sectors managed to close up on the day. The local market continues to rotate in the 6625-6825 region and with the next Fed policy decision due in less than 2-weeks investors feel reticent to take equities towards a new level of equilibrium without fresh news – as we mentioned yesterday the current consolidation looks identical to the one we experienced through June / July before stocks eventually broke out on the upside.
A tough day at the office for some areas of the market with a few stocks dropping double digits on weaker-than-expected updates, while interest rate sensitive sectors were back on the nose as US 10-year yields break above 4.1% e.g. Consumer Discretionary, Tech, and Healthcare. There was certainly no real bargain hunting on show, understandable as the Fed meeting looms in less than 2-weeks, “if in doubt stay out!”.
MM are sellling MP1
The ASX200 enjoyed another strong session on Wednesday to close the day up +0.3%, taking it back above the psychological 6800 level. Most of the action on a relatively quiet day unfolded on the stock level with the battery metal stocks bouncing nicely whereas one of MM’s holdings Megaport (MP1) was clobbered after failing to meet growth expectations, more on this later. We continue to feel the path of least resistance for stocks is on the upside as we approach the Fed’s interest rate decision in 2-weeks’ time and of course a potential “Christmas Rally”…
Another positive session for the ASX today with the market edging higher and is now ~400pts/6% up from the recent lows. AGM season is well underway and some hits and misses as always, with a lot of action under the hood. Yesterday a key holding was up 14%, today one is down 20%….Rocks and diamonds and volatility will likely persist.
Earlier this month we saw the RBA hike rates by only 0.25% when most pundits thought they would go 0.5%, over the last 2-weeks slowly but surely the markets are starting to embrace the possibility that bond yields are close to an inflection point and the inversely correlated rate sensitive stocks/sectors a bottom e.g. Tech, Consumer Discretionary and Real Estate. At MM we’ve stuck to our contrarian view that equities will be higher come Christmas, led by the high Beta Tech Sector, and yesterday we saw how easily some of these stocks can pop when sentiment turns, only slightly:
A very solid session for Australian stocks with a buoyant open built on throughout the day as Asian markets + US Futures rallied on growing optimism towards the current pickle in the UK. Risk was back on the table led by strong buying amongst the IT stocks along with Real-Estate, the only segment of the market that fell was Energy as some money rotated into the more beaten-up areas.
The ASX200 surrendered most of Friday’s gains yesterday as the market continues to rotate in the 6500-6800 region, it was the heavyweight resource stocks that weighed on Monday while the banks continued to look solid. Weakness was not too broad-based with 20% of stocks advancing but with BHP Group (BHP) -2.3%, RIO Tinto (RIO) -2.6% and CSL (CSL) -1.3% it’s hard for the index to perform on the day.
