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The ASX hit a 6-month high today at 7246, a rally of +834 or ~13% from the low set on the 3rd Oct at 6412. Following that day MM wrote….Yesterday’s dip by local stocks which tested this year’s 6400 lows may have been the final washout which would be ironic as it occurred on a Public Holiday for most of Australia but either way MM believes the market is looking for / has found a low and we will be higher into Christmas.
MM is trimming IGO, selling OZL & ALL
The last 12 months have thrown a spanner in the works of normal logic when we look at bond yields and leading economic bellwether, Dr. Copper, the hawkish rhetoric from the Fed is the obvious explanation but at some point in time, the usual correlation breakdown is likely to unwind. We shouldn’t forget the Fed got it very wrong when it came to timing interest rate hikes, letting inflation rip in the process, what’s to say they don’t make an equally poor call with the timing of when to back off and let the US economy breathe:
A solid session for the ASX today led by the sectors that fell yesterday, the ebb and flow continues, although today’s action was void of any meaningful detractors as 121 stocks from the ASX200 edged higher.
MM is selling SSM & buying NHC
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.
