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A bullish but quiet session to kick off the week with the market opening sharply higher but losing some direction as the day progressed, no trade in the US tonight (closed for 4th July) the reason however locally, we’re now approaching full year reporting so companies are in blackout and therefore news is thin on the ground.
Last week’s title on Monday was “Here comes the bounce”, things were looking on track come mid-week with the ASX200 up over 200-points but increasing recession fears were enough to reverse all of the gains plus a little more leaving the index down -0.7% come Friday’s close. Market volatility remains extremely high across a number of markets, not just financials, although interesting the stocks and sectors aren’t necessarily reacting as would often be expected:
The ASX200 got hit around -0.4% in the match on Friday taking the index down 0.6% for a week which promised so much early on, the market was over 200-points higher on Tuesday afternoon! Weakness through the local market was most prevalent in sectors traditionally sensitive to an economic downturn courtesy off escalating recession fears e.g. Real Estate & Retail, while IT stocks failed to find encouragement from a pullback in bond yields. Through the week much of the day to day volatility was delivered by the miners with heavyweight BHP Group (BHP) trading in a greater than 7% range. Downgrades have been flowing through the Resources Sector with some prominent names getting whacked – MM took advantage of the volatility to buy back into OZ Minerals (OZL) as it hit fresh 18-month lows.
The market opened well this morning, up more than ~50pts at our high, however once again US Futures traded lower throughout our time zone and Aussie stocks followed suit, closing only marginally higher. It was the resources weighing significantly with most sectors finishing in the green despite the weaker index. Some of the more unloved parts of the market over the last quarter caught a bid today with Real Estate popping 1.45% just one example.
The ASX200 bode farewell to the financial year in the same bearish manner that’s dominated the last 2-months taking its decline for the tax rule-off period to -10.2%. Losses on the disappointing Thursday compounded through the day with the index closing down 2%, only 10% of the main board managed to close in positive territory but the fall wasn’t caused by tax-loss selling as many might discuss this morning, it was all about aggressive falls in global risk assets during our time zone which flowed into the ASX:
A fitting way to end a tough year for markets with the ASX losing ~2% to close back below 6600, and on the low of the day. For FY22, the ASX 200 is down 10.19% with a 38% fall by the IT sector the starkest of stats, while Consumer Discretionary (-23%) and Real-Estate (-16%) also fell sharply i.e. the sectors most influenced by interest rates. On the flip side, a lot of joy came from Energy (+29%) and Utilities (+24%), while the Industrials (+0.76%), Staples (-2%), Materials (-9%) & Telcos (-9%) all outperformed the broader market to varying degrees. As we suggested…
The ASX200 struggled throughout yesterday finally closing down -0.9% although it did recover a third of the morning’s losses through a relatively unconvincing afternoon bounce. Considering over 80% of the market fell it wasn’t a bad result aided by a relatively steady Banking Sector. Under the hood, it was another tough session for tech, real estate and healthcare stocks, three sectors that keep looking for a low with very little success. Overall yesterday was a quiet day bar the sharp drop on the opening, EOFY portfolio tweaks feel like they’ve already been actioned i.e. investors have become much smarter over recent years with regards to tax-loss selling now commencing much earlier.
The ASX gave back yesterday’s gains today with Real-Estate and IT feeling the pinch, although the influential banks finished higher while pockets of the resources sector also held up well. The worst of the day’s price action was seen at midday before the index edged higher into the close – not a lot happening in US Futures on either side of the ledger.
The ASX200 enjoyed another strong day on Tuesday rallying +0.9%, although over 40% of the main board closed down on the day – it was a stellar performance from the Resources Sector that dragged the index higher e.g. BHP Group (BHP) +4.3%, Fortescue Metals (FMG) +3.8% and South32 (S32) +3.7%. One of the main themes over the last 6-months has been the huge gyrations across the relative stock/sector performances which definitely remains in play today:
Back-to-back strength for the Australian market with the ASX now up 350pts / 5.5% from the recent low ~6400. Energy the standout today as Oil rallied, reports of a price cap for Russian exports the catalyst while the headline in the AFR this afternoon that suggest investors are fleeing the share market for the ‘safety’ of property seems another bullish short-term indicator for equity markets!
