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The ASX snapped a three-day losing streak today as heavyweight miners powered the market higher, pushing the index back within reach of record levels. A 14-month high in copper prices sparked strong gains across the materials sector, offsetting weakness in banks and tech.
The ASX200 slipped 0.1% on a quiet Wednesday, which saw some initial morning weakness before buyers returned, taking the index back towards unchanged. Outside of Wesfarmers (WES) -7.5 points and James Hardie (JHX) +5.7 points, none of the main board added or retracted more than 2 points from the index.
The ASX eased modestly during the session as losses across retail and technology stocks outweighed strength in healthcare. Investors also took profits from gold miners after the precious metal briefly broke through the US$4000/oz barrier for the first time.
The ASX200 peeled away 0.3% on Tuesday, the first “real” day of trading this week, although losses weren’t overly broad-based, with 40% of the main board closing higher. While the retailers led the decline, it was noticeable to see some profit-taking wash through many pockets of the market as the US government lockdown drags on, even some gold names closed lower, despite the precious metal posting fresh highs.
A softer session for local equities, with volumes still light on the ground despite positive offshore leads, with gold’s relentless rise still clearly in focus with several brokers upgrading their forecasts. We think some consolidation is overdue for local stocks – a healthy reset as we move through October remains our expectation for now.
As we head into October, volatility has started to brew beneath the surface. In the US, volatility on the stock level is testing multi-year highs, and locally, it wasn’t that long ago that we saw the most volatile reporting season in recent memory. And in the last 24-hours, with the infamous October less than one week old, we’ve started to see big moves across stock and commodity markets.
The ASX200 ended last week up +2.3%, with the first three days of October already recouping all of September’s decline. The healthcare sector made a welcome return to the winners’ enclosure, ably supported by the influential miners and banks, while the energy sector was the only meaningful drag on the index. Only a flat week by the heavyweight iron ore miners reined in performance, although their sector peers worked hard to address their slumber, with 18 members of the materials sector closing out the week up more than +5%.
The ASX finished the week strongly, rising steadily through the session with strength in healthcare, tech and consumer names more than offsetting softer trade in energy and utilities.
The ASX 200 surged +1.1% on the second day of October, enjoying its best session in six weeks, as the market appeared to enjoy fresh funds flowing into the major stocks and sectors. Gains took the index back within striking distance of its all-time high as the influential financials and miners lifted the broad market, with 8 of 11 major local sectors closing higher, with energy stocks, real estate plays and health care also notching gains of more than 1% each.
A classic risk-on day for local equities, with investors embracing the dual engine of bank strength and a relentless gold bid. Materials were the clear standout, but the breadth of today’s rally was also impressive, with most sectors participating as the new quarter seemed to attract new $$. Healthcare has been the real index laggard in recent periods but today saw an obvious change of trend with CSL having the biggest influence from an index perspective, up nearly 4%.
