Archives: Reports
We are making a number of changes to the International Equities Portfolio today
The correlation between the US S&P500 and its Telco Sector doesn’t reveal any standout information even though the telcos are often described as defensive investments i.e. a “top-down” approach to the telcos in today’s uncertain times would have many investors allocating funds to the defensives but as the chart below illustrates at this stage its all about stock selection as opposed playing the sector per se – we used the US because the ASX Telco Sector is dominated by Telstra (TLS).
Local shares started the week on the back foot following a soft Friday night in the US. Inflation concerns picked up again after the previous PCE figure was revised higher and bond yields rallied as a result.
The anticipated path of central banks continues to dominate the swings by stocks as they react to the continual flow of volatile economic data and accompanying rhetoric from the likes of the Fed & RBA. The correlation is very clear with the ASX rallying strongly when bond yields fell in early 2023 only to reverse when yields reversed higher earlier this month.
The ASX200 slipped another -0.5% last week with a -4.3% drop by heavyweight BHP weighing on both the index and the Materials Sector, however, the market’s pullback has started to lose momentum as company earnings fail to deliver the disasters many had feared/expected. Reporting season remains the dominant factor on the stock level but it’s interesting that things aren’t panning out as would be expected on the sector level:
Overall, the week was a soft one (-0.56%) dominated by company results, a lot of moving parts in the market at the moment however earnings have been okay, not a disaster as many suggested, while the focus at the macro at least remains around the trajectory of interest rates.
The ASX200 continues to face headwinds around the 7300 area but when we take into account what was thrown at the index yesterday the minor -0.4% pullback felt like a solid performance, the broad market actually rallied with nearly 60% of the main board finishing up on the day but when heavyweight BHP Group (BHP) tumbles -3.4% the result is almost inevitable – more on this and related names later.
A softer session for the market, but again there was a lot happening under the hood as you’d expect with reporting season still in full swing – although tapering off from here. 60% of the ASX actually rallied today although when the Materials are down ~1.5% it’s always going to be tough going at the index level.
We are buying AGL Energy (AGL) in the Income Portfolio
The ASX200 put in a brave performance yesterday closing down just -0.3% in the process shrugging off a -2% drop by the US S&P500 plus Commonwealth Bank (CBA) trading ex-dividend $2.10 fully franked. The catalyst for the market’s impressive intra-day recovery was the wage data released at 11.30 am which showed wages are rising far less than expected and importantly well below the current rate of inflation i.e. everyone’s already getting worse off without the help of the RBA!
