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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.
The ASX200 put in an average performance yesterday after a promising start as it attempted to recoup some of Tuesday’s plunge following the RBAs aggressive rate hike, we finally closed up 25-points after the index surrendered over half of its early gains as the banks took one of their biggest hits in a long time e.g. Westpac (WBC) -6.1% and Commonwealth Bank (CBA) -4.4%. MM had highlighted earlier in the month that the banks usually struggle through June but even we were surprised by the severity of their decline – we cited this seasonal weakness looming on the horizon as a headwind for the ASX over the coming weeks…
While the market only rallied ~25pts today it felt a lot better outside of the banking sector with the big 4 down by an average of ~4.2%. Concern that sharper rate increases will have an impact on bad debts the reason with a note from UBS this morning the…
The ASX200 was thumped -1.5% yesterday after the RBA pressed hard on the jugular of the Australian economy, its 0.5% rate hike to 0.85% was the largest in over 20-years with more rate increases promised into 2023, the futures market is now pricing in a Cash Rate of 3.1% come December.
The market was hit today following a more aggressive hike from the RBA with benchmark interest rates up +0.50% to 0.85%, double the +0.25% hike that was expected. We think this is the right move given current inflation, however, the quantum of the hike is a direct result of the RBA’s prior inaction when rates were kept at emergency levels for way too long. They also signalled more to come but also said that inflation will miraculously fall back into their targeted 2-3% band next year. We certainly hope that’s the case, although it seems quite fanciful.
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.
