Archives: Reports
Friday’s dramatic +2.8% surge by the ASX200 saw the local market close up +3.8% for the week at levels not enjoyed since early June i.e. we’ve already exceeded our target of testing the August highs into Christmas. The weaker-than-expected US CPI lit up equities at the end of last week as hopes increased that the Fed will ease the rate of its interest rate hikes following the painful journey through 2022. Over the 5 days the huge relief rally was primarily focused on the resources stock although the tech names played some decent catch-up on Friday:
Winners: Evolution Mining (EVN) +30%, Sandfire Resources (SFR) +22.3%, IGO Ltd (IGO) +10.8%, and Goodman Group (GMG) +8.6%.
Losers: National Australia Bank (NAB) -2.4%, Whitehaven Coal (WHC) -19.4%, and QBE Insurance (QBE) -0.6%.
MM has been waiting for the final piece of our macro forecast to fall into place and the strong reversal in the $US and bond yields last week following Thursday’s weak CPI appears to be it, if we are correct the growth stocks, led by tech, will now spearhead the market’s recovery into Christmas while companies that enjoy rising interest rates such as QBE Insurance (QBE) and Computershare (CPU) look set to underperform into 2023.
• MM now believes the $US and bond yields have peaked for 2022 following relatively subdued inflation data.
Optimism around US inflation and interest rates extended on Friday night with strong gains in the tech-based NASDAQ and interest rate-sensitive names filtering down across the broad market e.g. Tech +1.7% and Materials +1.2%. Another strong night by commodities should really set the ASX on its way next week, copper +4.9% and oil +2.9% caught our eye, and the SPI Futures are calling the local market up another +0.6% this morning, back towards 7200!
• We continue to believe both US & Australian equities will be higher come Christmas with surprises feeling more likely on the upside.
The US CPI miss lit a fire under global markets sending the ASX to a 5-month high today as bond yields tumbled. The growth end of the market saw the best of it today, tech closing just shy of 5% better on the session. Further weakness in the coal price put more pressure on the energy sector, while Utilities were the only sector to closer lower as heavy-weight Origin (ORG) took some shine off the sector following yesterday’s surge. Overall, it was a strong week for the market, rallying for the third consecutive week, putting on 265pts/+3.85% as all sectors closed higher.
The ASX200 slipped -0.5% on Thursday as a clear break of the 7000 level continued to be one step too far – until this morning! Selling was fairly broad-based yesterday with 65% of the index closing in the red although weakness was noticeable in the influential Resources, IT, and Banking Sectors. However, considering the US market had fallen over 2%, the night before, under the combined weight of inconclusive mid-terms, poor corporate reports, and a tumbling crypto market we felt the performance was ok.
Multiple takeover bids was not enough to get the ASX higher today with weakness across the banking sector following NABs result yesterday & a pullback in the influential resources weighing on the broader market.
The ASX200 rallied another +0.6% on Wednesday basically closing smack on 7000 resistance but to adopt a corny often used phrase it was another classic game of two halves with well over 30% of the main index still closing in negative territory. Plus there were a few sectors such as Tech and Healthcare that sat on the fence, however as we’ve all seen this year the stocks /sectors could switch relative performance positions in the blink of an eye.
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.
