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The ASX200 eked out a reasonable +0.4% advance yesterday although unfortunately the gains were halved in the match courtesy of some aggressive selling in the SPI Futures – clearly the short-term money had little faith that the US market could recover from the negative sentiment delivered by Snap Inc’s (SNAP US) ~40% plunge on Tuesday night. The local rally on Wednesday was again very stock / sector specific with the banks, energy and gold stocks looking good while tech was again clobbered. Same trend, different day.
The ASX managed a 26 point gain today on the back of strength in the financials and consumer staples sectors. While finishing in the green, the market did give up ~30 points in the last 90 minutes of trading with futures falling further after the cash market closed. The Consumer Discretionary sector slipped -0.6%, one of three sectors to close down on the day, in the process it failed to pace with the stronger more defensive Consumer Staples sector. Technology was the black sheep of the market today though, falling nearly 3% with valuations still in question.
The ASX200 drifted lower yesterday afternoon largely in sympathy with weak US futures and regional equity markets but overall it was another fairly lacklustre day considering yet another gaffe by Joe Biden towards Taiwan and the severe downgrade by Snapchat (SNAP US) which saw the stock plunge over 30% in late US trade. The local market hasn’t moved in over 12-months hence it makes little sense to get too bearish / bullish around current levels but we still think stocks are starting to absorb bad news in a more constructive fashion and the markets internals are improving, let’s hope we’re not looking at things through rose coloured glasses!
The ASX200 experienced another quiet session today with the financials trying hard but ultimately failing to deliver a positive day for investors. The influence of the banks on the index was very apparent with over 70% of stocks on the main board falling but the index closing less than 0.3% lower. Overall we felt it was a solid performance considering US futures were down more than 1% when we closed courtesy of Joe Biden’s 5th Taiwan gaffe annoying both China and the White house plus Snap Inc’s (SNAP US), the social media company…
The ASX200 closed mildly higher yesterday with the election already taking a backseat to global economic news, on Monday stocks embraced the news into the weekend that China plans to reinvigorate its economic growth with over $US5 Trillion of stimulus after the “COVID Zero” policy has sent many industries into a lengthy slumber. The world’s 2nd largest economy is now looking to shift to a productivity-led economy from an investment led growth model that has underpinned the country for around 30-years – more on this later.
The ASX200 tried hard early to deliver a post-election rally for local investors but a 1% pop by the S&P500 futures wasn’t enough to instil lasting confidence locally and after a 50-point advance by 11am we drifted lower throughout the day to close only 3-points higher. The selling felt more akin to a lack of interest as opposed to meaningful negativity with a drop by the banks & healthcare names largely offsetting gains in the Resources Sector.
The polls finally got one right, “ScoMo’s” popularity issues plus a backlash against their climate control policies condemned the Liberal Party to a crushing defeat on Saturday although interestingly the Labor Party also suffered a drop in its primary vote as the Independents steamrolled to victory in a number of key seats. As we’ve said previously MM has no political bias and we wish the new Prime Minister elect all the best over the 3-years ahead, especially with the tricky economic backdrop looming on the horizon specifically a potential recession as central banks hike rates to fight inflation.
The ASX200 finally ended another choppy and nervous week on the front foot with the index closing up +1.15% on Friday helping it to a +1% gain, its first weekly advance since April, overall an excellent performance considering the aggressive plunge on Thursday. The tech stocks finally attracted some buyers with a number of major sector names such as Altium (ALU), Technology One (TNE), NEXTDC (NXT) and Xero (XRO) all bouncing over 5% for the week.
A solid session to end the week for Aussie stocks with the local market rallying over 1% with strong gains in some stocks, particularly in the IT & Materials sectors. Easing policy in China the main catalyst with banks cutting the five-year loan prime rate, which is used to price mortgages. As we’ve written numerous times recently, when China eases policy, they generally do so on multiple fronts which is clearly supportive of growth, a source of significant concern in recent times.
The ASX200 was clobbered -1.65% yesterday following savage declines on Wall Street, only the healthcare & gold names caught any semblance of a bid while consumer stocks followed their US peers sharply lower around concerns of rising wages / operating costs. Equities are continuing to adjust to higher inflation and interest rates but we believe it’s now predominantly fears of a potential recession on the horizon that’s become investors’ main focus, as we approach the mid-point of 2022 MM feels we probably need a sniff of slowing inflation before markets can find a meaningful bottom.
