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The ASX200 closed down -0.9% on Friday but it still managed to end a choppy week up +1.6% courtesy of broad-based gains led by the Gold, Real Estate, Utilities, and Industrial Sectors, a pretty good performance in our opinion taking into account some poor stock specific news from both home and abroad, Chinas increased unfriendly market policies plus of course the uncertainty around the looming rate decisions from both the RBA & Fed.
Commodity weakness forced the ASX to give up much of this week’s strong gains, trading lower into the weekend. There was little appetite to buy ahead of the break with markets taking a cautious view. Tech was also in the firing line, finally succumbing to the weakness seen in the Nasdaq this week. Banks found their feet today though to help stem some of the selling, recovering some of yesterday’s slide. Despite today’s weakness, the ASX closed up +108pts/+1.63% this week.
The ASX200 continues to climb a wall of worry closing up another +0.5% yesterday, well above the psychological 6800 level while also posting its best close in 6 weeks. The resources drove the market higher with heavyweights Woodside Energy (WDS), BHP Group (BHP), South32 (S32), and Newcrest Mining (NCM) all enjoying a good day at the office. If the banks had embraced ANZ’s result we could easily have seen ourselves challenging 6900 but for now, we’ll have to make do with an encouraging ~7% rally from this month’s low.
The ASX punched new 5-week highs again today, now stringing together 4 consecutive days in the green. Even more impressive was that the index rallied without the banks as a disappointed ANZ result weighed on the Financials Sector. Resources strength drove the index today, supported by improving commodity prices and a weakening USD. Focus will turn to the ECB tonight which is expected to raise rates by 75bps, while early 3Q US GDP estimates will also land.
The ASX200 is starting to shrug off bad news as was evident yesterday when the local index gained +0.2% in the face of bearish news on both the Australian economy and the US corporate front:
Aussie shares followed positive overnight leads to jump to a 5-week high early in the day however higher than expected inflation data tapered the rally before midday. The market gave up 43pts in around half an hour, however, support kicked in with the index never dipping into the red today. Despite the higher-than-expected CPI, it was the yield focussed sectors that outperformed the market as Utilities and Real Estate rallied more than 2%.
The ASX200 rallied another +0.3% on Tuesday as it continues to toy with the psychological 6800 area, as we’ve said previously the market set-up is evolving with an uncanny resemblance to its look & feel through late June, into July. Four months ago once the consolidation was over the market rallied strongly without a backward glance, we are currently wary that many investors are too pre-occupied with the Fed’s interest rate decision and rhetoric next Tuesday when a more pragmatic and aggressive position towards stocks feels warranted as the current wave of selling appears to have exhausted itself.
A choppy session for the ASX today up ~50pts early before tapering off around midday ahead of the Federal Budget tonight – a quick run through of key budget themes below…
We are adding James Hardie (JHX) to the portfolio
The ASX200 rallied strongly yesterday following Wall Street’s lead on Friday night as opposed to the savage declines which rolled across Chinese-facing stocks as Xi Jinping took full control of the world’s 2nd largest economy. The local market may have closed up +1.5% but it still surrendered ~30% of its early gains as the Chinese stock market rout weighed on sentiment. However, there were some shining lights which caught our attention as over 85% of the market rallied:
