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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:
The ASX showed a decent underbelly today rallying well from the midday low to close only marginally down on the session. US Futures edged higher + the minutes from the last RBA meeting showed a pause on future hikes remains a possibility – both had buyers back from the sidelines, with tech & most commodities enjoying the buy-the-dip mentality – the MM Flagship Growth Portfolio which is skewed to IT & Materials was down ~60bps below the index this morning, before closing ~30bps above it, showing the clear change of trend intra-day.
MM is reducing WDS and buying WHC.
The ASX200 slipped -0.2% on Monday after testing our much-flagged 7200 target level in the morning, the simple problem was the broad market was soft with only 30% on the main index managing to close in positive territory. On the sector front, only the Energy & Materials Sectors closed higher while the tech stocks in particular disappointed after a strong performance by the NASDAQ on Friday night although the intra-day sentiment wasn’t helped by US stock Futures drifting lower throughout our day session. As we’ve been saying a bit of late it was yet another day of two halves:
The market consolidated recent gains today with the ASX opening well before tracking lower as the day progressed. This is the sort of two steps forward and one back trading action we think will play out as the world continues to grapple with a large cross-section of economic challenges, although we reiterate that we remain positive into early 2023.
We started off last week’s Macro Monday Report by focusing on the $US, our conclusion was straightforward and so far it appears on the money:
