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End of month and end of quarter today and it’s been a challenging one to say the least with a raft of macro-economic landmines to navigate through however when the bell rang this PM, the ASX 200 had finished up +0.74% having traded in a big ~10% quarterly trading range. The Energy sector put on +25% in the March quarter, the IT stocks fell by -14% showing the two extremes, however there was a lot happening in between these outliers.
Wednesday saw the ASX200 continue its march towards new all-time highs finally closing up another 50-points, the index closed within 1.6% of its previous milestone set back in August of 2021. Gains were reasonably broad-based although we still saw over 30% of the index close in the red, the resources again weighed on the index while the growth related stocks were the standout winners e.g. Xero (XRO) +5.3%, Megaport (MP1) +7% and carsales.com (CAR) +3.5% – we are seeing a new trend emerge, if bond yields simply trade sideways then tech stocks extend their recovery. However the current “bounce” can be put into perspective when we consider how some of the individual…
A positive session for the market today as we approach the end of month and end of the quarter – a period that’s been extremely volatile with a raft of reasons for the market to be down, instead the rally continues for a 7th straight session, today it was IT stocks that led the line bouncing nearly 4% while Energy fell away on news of a de-escalation between Russia & Ukraine. The news cycle has been dominated by the Federal Budget which has been reasonably well received, some specific stock beneficiaries are discussed in our Weekly Market Matters Video Update below.
The ASX200 rallied another +0.7% on Tuesday taking the local index to within 2.3% of its 2021 all-time high – our call for a test of 7700-7800 through March & April is starting to feel almost conservative. Gains were broad-based yesterday with over 75% of stocks rallying, only the previously “hot” energy and resources stocks slipped lower while growth stocks regained their mojo with a small degree of gusto as bond yields took a rest, although there was no signs of them falling.
A strong session for the ASX today with most sectors in the green ahead of the budget tonight. Technology stocks followed their US counterparts higher while consumer discretionary names benefitted from chat that tonight’s budget will put more money in consumers’ pockets. US Futures were positive during our time zone which created a tailwind while Asia was also in the green. It doesn’t feel like it, but today’s advance was the 6th on the trot for the local market.
The ASX200 managed to hold on to small gains come 4pm on Monday after grinding lower from our midday highs approaching 7450, the index’s highest level since mid-January. The markets feeling a touch tired having already rallied +5.6% in March but although only 40% of the main index closed up yesterday when the banks and big miners are strong the ASX tends to follow suit e.g. Westpac (WBC) +1.2%, RIO Tinto Ltd (RIO) +1.4% and BHP Group (BHP) +2.3%. Its been this exact impressive performance from these 2 influential sectors…
The ASX lost some steam today, peaking up +52 points early only to taper off into the afternoon session, plus it was hit hard in ‘the match out’ between 4 & 4.10pm. That sort of trading action is indicative of a short-term top / pending consolidation which is easy to comprehend after the market has rallied nearly 9% from the January low sub 6900. The Material stocks best on ground today while the IT sector was buffeted from bond yields which continue to storm higher.
Last week saw the ASX200 extend its stellar recovery ignoring soaring bond yields in the process, the local market is set to open this morning less than 2.5% below its all-time high yet the RBA is forecast by a number of economists to hike rates from todays 0.1% to 1.0% by Christmas – not big numbers compared to previous decades. However the comparison of Australian 3-year bond yields and the RBA Cash Rate makes a strong argument that we could even be looking at 2% by 2023, the banks aren’t silly just look at their moves over the last week to get a sense of what they believe is on the horizon:
The ASX200 enjoyed another strong week to take March’s rally to over 5%, under the hood a mixed bag of Utilities, Resources and IT stocks all enjoyed strong moves while the banks remained supportive of the index. As we slowly but surely edge towards fresh highs MM expects volatility to increase on the stock level as fund managers pick out different names they believe have run too hard but we feel the general absence of sellers will remain and could April deliver some reversion on the stock / sector level as investors take profit on the top performers while chasing value in names which look ready to play some catch up. The variance has been huge across the board as we approach the end of Q1 of 2022:
A marginally positive session today with the market chopping in a tight +/-35 point range closing back above 7400, Materials strong thanks to strength in the Iron Ore price while Healthcare struggled.
