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The ASX200 endured another bad day at the office on Wednesday with the index closing down a further -1.3% after flouting with positive territory at lunchtime. Yesterday’s fall was on a distinct lack of buying as opposed to aggressive selling – investors remaining very nervous, a pretty understandable mindset considering the press, both financial and mainstream e.g. yesterday saw Jarden’s suggest local house prices are set for their worst fall in over 40-years. The prospect of the Fed hiking interest rates by more than expected this morning felt like it was enough to send buyers searching for cover as cash feels the comfortable option for many at the moment, ironically a relatively poor performing…
A choppy session for the ASX with the market showing early signs of stabilisation to be down only marginally before weakness crept into US futures which dragged the local index lower by the close. The US FOMC conclude their meeting on interest rates tonight where they’ll raise rates, probably by 0.50% or potentially a more aggressive 0.75%, recent leaks imply the latter while there have been growing calls to bite the bullet and raise by 1%. A 0.5% hike would deliver a US benchmark interest rate of 1.25%-1.50%
MM are amending our Flagship Growth & Active Income Portfolios
The ASX200 was hammered another -3.6% yesterday with well over 90% of the main board closing in the red, we may have bounced from support below 6600 but the market clearly remains very nervous. Recent weeks have certainly reinforced the old saying “sell in May & go away”, probably more effectively than all but the most pessimistic bears were expecting. During periods of uncertainty and volatility its important to maintain a degree of perspective even if feel like running for the hills, a move that history tells us is not a prudent course of action for long-term investors.
I have a few sayings written on my desk at work and at home, probably the most useful is simply ‘keep turning up’. By that I mean continue to do the work, don’t get too emotional about the market (the media does not do us a favour here) and continue to invest which is exactly what we should be doing in times like this. Sell-off’s pass and it’s the long game that we should all be focussed on. Today’s move was a big one on the downside, particularly this morning with the ASX keying off two bearish sessions in the US to fall ~5%. Nearly everything was sold…
Global stocks have experienced ever-increasing volatility through 2022 and while its easy to point the finger of blame directly at surging bond yields we believe the removal of liquidity is more specifically the issue although by definition they go hand in hand. What matters is where to from here so MM and our subscribers can add value (alpha) to our portfolios while both fear and opportunity increase by the week. The obvious place to start our search for answers is by reviewing the previous occasions when the Fed removed QE and its subsequent impact on stocks.
Last week saw the ASX200 whacked over 300-points or -4.2% as we edged under Mays low into the close on Friday, if we see a downside swing this month similar to those through April and May a test below 6800 feels inevitable over the coming few weeks – perhaps even on Monday! Unfortunately the markets feeling a little like a row of dominos at the moment, firstly we saw the undisputed bursting tech / growth bubble, this was followed by the battery names on June the 1st and then last week the influential banks joined the bear party, will the resources be next? As we said on Friday this was the worst week in 2-years and it certainly felt like it as the attention of the sellers was refocused to some previously strong names / sectors, a few that caught our attention:
The week ended on a sour note today with the ASX following the US market’s lead with inflation fears being the main driver. Banks found some support early in the day but ended near their lows as traders took risk off into a long weekend. Interest rate-sensitive sectors of Real Estate and the discretionary retailers took the brunt of the selling. The end result saw the market down -4.24%/-307 points for the week, the worst performance since April 2020.
The ASX200 was smacked for the 2nd day this week as UBS’s more cautious rhetoric towards the banks continued to drive the influential sector lower e.g. Commonwealth Bank (CBA) -2.6% and Westpac (WBC) -3.7%. I can feel the questions brewing up for the weekend report “is it time to buy the banks?”, firstly lets simply revert to the seasonal statistics as the financials dance to their common June tune:
A tough session for Aussie stocks with ~75% of the market trading lower while ~7% of the ASX 200 fell by more than 4%. The banks were again on the nose all finishing down, although there was a ‘buy the dip’ mentality that played out after a tough morning session, Commonwealth Bank (CBA) the most obvious beneficiary finishing ~$2 above their intra-day low however it wasn’t enough to support the broader market which finished on the low of the session.
