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A disappointing day overall as the local market gave back much of yesterday’s strong rally. Things won’t move in straight lines, and today was certainly proof of that with ~75% of yesterday’s gains on the broader market handed back. Tech was hit by rising bond yields, the Aussie 10-years rallied 10bps after tracking lower over recent weeks. Hefty selling on the futures market weighed as well as it seemed a little lost with the US market closed overnight. All sectors closed in the red today and the influential financials sector was the hardest hit.
The ASX200 rallied strongly on Monday delivering an emphatic “risk on” session which saw 85% of stocks advance while only the Utilities Sector closed down on the day, the message from investors was loud and clear – “Goodbye & good riddance to April + May!” As we’ve discussed through recent reports bond yields feel like they’ve topped out for now hence under the hood sector rotation is underway as portfolios that are largely positioned for surging inflation have their hawkish skew at least tempered. We believe yesterday’s relative performance moves across the market groups / sectors will largely follow through, at least short-term:
The local market ripped through the 7200 resistance today in a positive start to the week that saw Tech continue its positive momentum. Yields have taken a breather and that has allowed growth names to find their feet again. Materials were also well bid on positive commodity prices though the energy sector was left behind despite another positive move from oil markets today. Utilities underperformed the broader index and was the only sector to closer down on the day.
Over recent weeks MM have repeatedly remarked about how bearish investors both feel and are positioned with a number of measures sitting at decade extremes, not a scenario that usually lasts particularly long before we experience a squeeze of the complacent crowded position. After 7 consecutive weeks of falls, the S&P500 rallied +6.6% last week with sellers appearing to exhaust themselves as we saw hints of some Fed flexibility over the coming months. The data in our opinion while mixed definitely challenged many analysts’ views that we are on an inevitable path of higher rates followed by a subsequent recession. MM saw a few pockets of clear optimism last week:
While it certainly didn’t feel like it at times the ASX200 has managed to advance for 2 consecutive weeks aided by strong moves by the banks and resources, arguably the backbone of the Australian market. The index may be sitting ~6% below its late 2021 all-time high but the performance from a number of the market heavyweights is far more impressive:
The ASX200 enjoyed a strong finish to the week rallying +1.08% on broad-based buying following the strong night on Wall Street. The futures selling reappeared around 10.30 am but it felt they were finishing off a large order with the weakness exhausted into lunchtime. While over 75% of the market contributed to the day’s advance it was solid gains in the consumer discretionary & large-cap miners plus ongoing strength in the banks that caught our eye. Again the market is knocking on the 7200 door, a break clear on the upside next week might see some decent buyers return to compound the last 2-week’s gains.
The ASX200 experienced a tough Thursday falling -0.7% as the previous sessions selling in the futures morphed into a 2-day affair, ironically under the hood it was a clear “risk on” session as we saw weakness in the leading supermarkets while the Tech Sector rallied over 1%. Unfortunately it now appears that the semblance of strength in our growth stocks will need another catalyst after Canadian suitor Telus pulled its $1.2bn bid after just a few hours, were used to takeover bids failing but this is getting crazy, only a few weeks ago a similar thing happened with CVC’s bid for Brambles (BXB). Interestingly we saw 6.4mn shares change hands…
The ASX200 fell away slowly but surely throughout today finally closing down 49-points after being up +27-points in early trade, it appears the leftover selling in the SPI futures we mentioned this morning was still around in earnest drawing a line in the sand around the psychological 7200 level for the main index i.e. a close above here will look good technically. Selling was broad-based as you would expect when its futures led, over 60% of the index closed in negative territory. The only shining light was the Tech Sector and closely…
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.
