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The ASX200 commenced the week on the back foot falling -0.45%, erasing the month of Junes small gain in the process, the selling was light but fairly broad-based with less than 20% of the main board managing to rally on Monday. With both the US & UK after-market Futures rallying strongly throughout the day AEST it felt like the local market was being held hostage by the RBA’s interest rate decision at 2.30 pm today – there are mixed opinions as to how far Philip Lowe will go with the interest rate markets pricing in a 0.28% rate hike and for the cash rate to reach 2.9% by the end of 2022. Markets hate uncertainty hence if overseas markets remain well supported…
The market kicked off a new week on the backfoot today with weakness in technology and other growth-related stocks weighing on the broader market, offset by continued strength in the Energy sector.
The ASX200 is trading -5.2% below its all-time high posted in 2021 while the more tech-oriented S&P500 is anchored -14.6% below its equivalent milestone. Bond yields, inflation, interest rates etc have undoubtedly been the main driver of the pullback in equities although it’s been well supported by Russia’s invasion of Ukraine and ongoing supply chain disruptions courtesy of COVID. However there is another cloud looming on the horizon that is likely to weigh on meaningful recovery attempts, MM has touched on Money Supply a few times over recent months but it’s looking increasingly likely to hamper equities moving forward. The Fed has turned off the free money tap…
Last week saw the ASX200 manage to extend its recovery to 3 consecutive weeks albeit in a “2-steps forward, 1-step back” manner with a strong performance by the resources offset losses by a tired Banking Sector. We are starting to see some stock / sector reversion creep into the market as we approach the EOFY although the tech stocks still haven’t found any buyers as they fail to enjoy any semblance of a recovery i.e. it was another very targeted “risk on” week.
A strong session to end the week with the ASX 200 +0.90% higher ahead of US payrolls data tonight. Gains were fairly broad-based with ~75% of the index up, resource stocks leading the way led by a bounce-back in the battery metals space after a tough period. The retailers the only sector to finish in the red today despite a strong session overseas.
The ASX200 ended Thursday down -0.8% on broad-based selling, only 20% of the index managed to close in positive territory with the gains focused on the energy names plus a relatively small bounce by the battery metals stocks that were hammered on Wednesday. With the exception of the Utilities Sector, there was nowhere to hide although the decline felt more like a lack of interest by the buyers as opposed to aggressive selling e.g. only 4% of the index fell by more than 5% whereas on Wednesday we had the same number of stocks plunge by over 10%. The tech stocks were again the weakest link falling over 2% following strong US economic data reigniting fear of more aggressive rate hikes over the coming 12-18 months.
Aussie shares struggled from the get-go today and never really staged any meaningful recovery as traders went risk-off. Concerns around the rate of tightening in the US drove the weakness while Australia could see another rate hike on Tuesday, of up to 40bps according to ANZ’s economist. The concerns meant the high growth Tech sector was the hardest hit, but despite the broad weakness, two sectors finished more than 1% higher.
The ASX200 experienced a choppy Wednesday but some healthy buying into the close finally saw the index enjoy a gain of +0.3%. Stock & sector rotation was yet again the main game in town with 10% of the main board falling by over -5% while 7 names were hammered by more than -10%, however the influential banks recovered some of their recent losses which when combined with advances by the major iron ore producers was enough to take the index higher even with less than 40% of stocks rallying. This time the underlying theme was clearly “risk-off” with a couple of specific sectors receiving close attention from the sellers:
The local bourse was choppy in a tight range today, setting a high for the day early and falling 34pts by 1pm before a helpful 17pt jump in the close meant it finished back near the early highs. The more defensive sectors were the outperformers today as the Telcos and Financials carried the index. Utilities were smacked on more stock-specific news and tech gave back some of its recent gains. The Small-Cap index struggled as well with money moving into the ‘safer’ havens today, it underperformed the ASX200 by 2%.
The ASX200 was sold off over 1% yesterday in classic “two steps forward – one step back” fashion i.e. after basically rallying from 7100 to 7300 in just 2-days we’re back at 7200, the middle of the last 12-months trading range. The banks weighed on the index on Tuesday with the “Big Four” falling an average of 2% while the Tech Sector was back under pressure falling -1.9% however losses were fairly broad-based with 65% of the main board declining as “risk off” seems to follow “risk on” as fast as night follows day!
