Archives: Reports
The ASX200 ended yesterday’s mixed session up just 10 points but under the hood, it was a very eventful day even while the market maintained its magnetic attraction to the 7500 area. The interpretation of the Fed’s 0.25% rate hike and accompanying rhetoric delivered some very different performances on the stock & sector level:
The ASX 200 is up nearly 7% in calendar 2023 but is now looking very tired/uncomfortable above 7500. The best of today’s trade was seen early with the index +47pts at the high, hitting 7548, only ~1% from its all-time high, but with BHP down 1.4% on the session and the banks rolling over into the close.
The oil price has been range trading over the last 4 months albeit near the lower level of prices for the last 18 months. The US Energy Sector has significantly outperformed its Australian peers over the last year and although we believe both sectors are now looking tired its MM’s view that better risk/reward is now on offer locally however we’re conscious that in both absolute and relative terms trends have been extending post Covid hence we’re adopting a neutral bias at this stage until the next cycle shows its hand.
A strong lead from US markets took the ASX to another 9-month high today, however, early strength was once again sold into.
MM are selling PNI in the Emerging Companies Portfolio.
The local resources stocks have only slipped -2.3% from their January high but it feels more with a few prominent names on MM’s radar well below levels scaled over recent weeks e.g. South32 (S32) -6.8%, Mineral Resources (MIN) -8.3% and now after yesterday’s disappointing result IGO Ltd (IGO) -11.5%. As we said in the Tuesday Match Out Report when we reviewed IGO’s miss – “Downstream cost pressures are to blame which we think will be a common theme through this upcoming reporting period for the miners”. If this opinion proves correct and the $US can bounce back towards the 105-107 area the 3 pullbacks mentioned could easily double in a market that MM believe is complacently long miners.
The market was supported early on however a flow of negative company updates (generally at the smaller end) and a softer-than-expected Retail Sales print at 11.30am had the sellers re-loading and the ASX 200 fell back below 7500 for its 4th straight session. The defensive sectors were the place to be, the supermarkets rallied on a broker upgrade while the tech sector struggled after another lacklustre update from Megaport (MP1).
The ASX200 slipped -0.16% yesterday in the process demonstrating a couple of points we’ve been highlighting of late:
For the third straight session, the ASX rallied through the 7500 level but failed to hold it to the close as profit takers sell into the early session strength. Despite the index closing lower, more than half of the shares in the ASX200 closed higher today, showing the smaller end of town was starting to see some catch-up buying. Tech was the standout sector, helped by a few upgrades at the big end of the sector, while telcos were also better than 1% higher as a sector. Staples and Healthcare were the main laggards today.
January has delivered stellar gains for most stock market investors, the ASX200 has already surged +6.5% outperforming both the UK FTSE +4.2% and US S&P500 +6% although the Chinese CSI 300 Index +8% has caught our attention as markets embrace a “risk on” stance as the world 2nd largest economy reopens following its attempted and failed COVID Zero Policy. The performance of the local market on the sector level so far in 2023 illustrates this point perfectly:
