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The title for Monday’s report over the last fortnight has been “Here comes the bounce – 1 & 2” and the ASX200 has delivered on the index level albeit in a slow and choppy manner with major stock/sector rotation unfolded beneath the hood – investors are swinging their attention between focusing their fears on either rising inflation/bond yields or an imminent recession. On Friday night strong US employment data saw an expected rally in bond yields which initially sent US stocks lower but it was encouraging for the short-term bulls like MM that they ground back to close unchanged setting the stage for a firm open by local stocks this morning.
The ASX200 experienced a choppy week which threatened to unravel on Wednesday only to come good on the home stretch with the local index finally closing up over +2% on broad based buying which saw over 80% of the main board close higher come Friday afternoon. However the real action was in the Resources Sector which ultimately closed mixed, overall this feels like a good result considering the carnage which was witnessed on Wednesday:
While the market closed in the green today, the ASX closed well off its highs today as selling picked up into the close. Resources were strong again today on the back of Chinese stimulus plans with the Asian superpower talking up s $300b+ package to help support manufacturing and construction. The unloved tech sector also got a boost into the weekend despite bond yields tracking higher. Telcos were the worst off as investors preferred the risk-on trade, however, it was the financials that held the index back the index the most
The ASX200 rallied +0.8% yesterday on reasonably broad based buying that saw over 60% of the main index rally while importantly there was an absence of any meaningful aggressive selling across any of the 11 sectors. Its early days but stocks are positive for the month following the carnage experienced by equities through June, the market feels well supported at the moment which coincides with the seasonal strength that usually unfolds through July before things historically go quiet into early October. The stock / sector rotation under the hood of the market looks destined to continue for…
Commodities bounced back today, finding some support after a few weaker sessions, helping the local market rally today. It was a choppy start giving up its initial 30pt rally by 11.30AM, but buyers returned in the afternoon and the index pushed higher into the close. Three of the Big 4 banks were also all in the green adding to the market’s strength today. A number of tech names were hit hard today but the overall sector only gave up a small portion of yesterday’s rally while the industrials fared the worst today.
Bizarrely it felt like a positive day for the ASX200 on Wednesday even though the index ended the choppy day down -0.5%, most stocks managed to rally but the weakness for the index came from one very specific and influential sector of the market i.e. the heavyweight resources which were hammered following steep declines across commodities markets on Tuesday night as fears of a global recession continued to escalate. MM has been looking for a snap back in the dislocation between bond yields and tech stocks for a few weeks and it finally kicked into play with a vengeance yesterday supporting the index in the process:
While the market was only ~0.5% lower today, there were some large shifts from a sector perspective with higher value growth finally popping on the upside buoyed by a fall in bond yields, while recession fears knocked energy and commodities for six. Property & technology stocks were a standout, the pin-up of the tech sector being Xero (XRO) which rallied 6.65% while Healthcare was also strong, CSL finally breaking out of its stubborn trading range and rallying 2.58%. Lots of doom and gloom today…
The ASX200 managed to rally +0.25% after the RBA raised interest rates 0.5%, right in line with expectations, the cash rate sits at 1.35% with pundits now attempting to 2nd guess what comes next. We are in the midst of the most aggressive tightening cycle in almost 30 years after two consecutive 0.5% hikes and many people are now expecting another to follow in August as local inflation is tipped to edge towards 7% by Christmas:
The RBA raised rates today by 0.50% as expected, the market rallied, the AUD edged marginally lower and the reaction was generally as we thought it would be, the market appreciating a level of certainty and a central bank stepping up and acting as they should be given the inflationary pressures. Not a lot else happening in the market today, so a short note as a consequence.
The ASX200 started its first full week of July on the front foot rallying +1.1% on broad-based buying which saw over 80% of the main board close up on the day. All sectors rallied with only the industrials and utilities advancing less than 0.5%, the underlying strength flowed through from the bond market which has started to question how fast central banks will hike rates as recession fears increase, global economic data is already starting to deteriorate threatening a recession sooner rather than later. On balance, MM believes we will see rate cuts in late 2023 but in today’s uncertain…
