Archives: Reports
A solid end to a positive month for the ASX with 60% of the market finishing higher, although there were some fireworks happening under the hood with Megaport (MP1) up ~40% on better guidance. For the month, the ASX 200 put on +1.83% and it was the sectors that benefit from lower interest rates that saw the best of it, namely Property & IT while the Material’s were the only group to end April in the red.
We are switching from IGO to PLS in the Flagship Growth Portfolio
Post-COVID M&A activity has been extremely strong even as bond yields rallied and the US/Europe suffered a minor “Banking Crisis” courtesy of tumbling bond prices and awful risk management. Private equity was reported to be holding ~$US2 trillion at the start of 2023 and whatever the actual number is when we combine this with large cash reserves in the hands of Australian super funds plus cashed-up fund managers there remains a huge undercurrent of support for stocks.
The ASX fell again today, now down 5 consecutive sessions with Banks & Healthcare stocks contributing most of the pain at the index level. Concern stemming from the US financial system is headlining the media, however, in MM’s view, it has simply been a case of a tired market approaching a seasonally weak period and it made sense to take some cream off the top after a solid run for stocks.
Travel is enjoying a strong recovery after being basically shut down through COVID with travel bookings proving resilient despite extremely high prices e.g. the Australian Bureau of Statistics just reported that domestic holiday prices increased by 25% in March year on year while international soared an incredible +38%. We are clearly spending our pandemic savings and spreading our wings after being couped up by COVID for over 2 years.
A choppy session for the ASX today with a lot of company news met with key economic data. A weaker open, although better results from key US companies aftermarket saw US Futures rally which provided some support to local stocks, before the recovery really got underway post the inflation data at 11.30 am where the RBA’s preferred measure of prices came in a touch below expectations, and this reduces the chance of another hike in May.
The US market took a hit following a night of disappointing earnings as investors weighed through the numbers to evaluate the strength of corporate America in the face of higher interest rates – heavyweights Microsoft (MSFT US) and Alphabet (GOOGL US) reported after the bell with both being decent beats. The standout losers were First Republic Bank (FRC US) -49%, General Motors (GM US) -4%. and UBS Group AG (UBS US) -4.7% while for the bulls PepsiCo Inc (PEP US) +2.2% beat expectations. Bonds rallied sending the US 2 years back under 4% as recession fears lifted in the wake of weak stocks.
A quiet session as you’d expect with all the smart people taking Monday off to lock in a 4-day break ahead of ANZAC day tomorrow….The ASX opened lower and remained in a holding pattern, although there were a few moves on the stock level that caught our eye.
Equities started to consolidate recent gains last week with the ASX200 slipping -0.4% while the S&P500 advanced just +0.1% where reporting season produced plenty of volatility on the stock as opposed to the index level. Bonds have dictated sector performance through 2023 with some extra spice thrown in by the banking crisis which was primarily focused on US regional banks. It’s been a fascinating year so far which we believe will deliver plenty more stock & sector rotation.
The ASX200 slipped -0.4% last week after testing the psychological 7400 level on Monday, it was the turn of the energy & mining stocks to weigh on the local index while the banks did their best to maintain the market’s upward trajectory e.g. ANZ & NAB both rallied over 1% while Woodside (WDS), BHP Group (BHP), and RIO Tinto (RIO) all fell by more than – 3%. On the stock level, it was a week that saw some standout reversion to a number of the earlier trends through 2023 with Whitehaven Coal (WHC) surging +7.4% whereas Domain Holdings (DHG) fell -7.1%.
