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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:
The ASX opened with a bang this morning buoyed by a strong session on Friday night in the US + US Futures also opened +0.75% higher this morning, although as they tapered off, our market followed suit having seen an early high of 6823 we ultimately closed more than ~40pts below it, although still a solid session.
The end of last week painted a picture to encourage the bulls although as we often say most statistics can be skewed to tell any specific tale:
The ASX200 ended its penultimate week of October down -1.2% with the damage unfolding over the last 2-days hence going into the weekend the market actually felt far worse, however, the market remains up over 200-points for the month – it certainly doesn’t feel like it! Yet again the Energy Sector was best on the ground while the Utilities Sector carried the wooden spoon. We can see the local index remaining in the 6600 – 6800 trading range into next month although we still believe the risks are on the upside.
The ASX limped into the weekend although we did edge marginally higher for the week with two distinctive halves. The bulls were out early with a combination of consolidation in bond yields and strong earnings sending global stocks higher, before Fed officials refocused attention back on inflation and interest rates sending bond yields to new cycle highs.
The ASX200 fell over -1% yesterday on broad-based selling which saw over 80% of the leading index close in the red, only the Energy and Financial Sectors managed to close up on the day. The local market continues to rotate in the 6625-6825 region and with the next Fed policy decision due in less than 2-weeks investors feel reticent to take equities towards a new level of equilibrium without fresh news – as we mentioned yesterday the current consolidation looks identical to the one we experienced through June / July before stocks eventually broke out on the upside.
A tough day at the office for some areas of the market with a few stocks dropping double digits on weaker-than-expected updates, while interest rate sensitive sectors were back on the nose as US 10-year yields break above 4.1% e.g. Consumer Discretionary, Tech, and Healthcare. There was certainly no real bargain hunting on show, understandable as the Fed meeting looms in less than 2-weeks, “if in doubt stay out!”.
MM are sellling MP1
