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The ASX200 closed down 1% yesterday as the escalating Ukraine conflict continued to panic markets although we significantly outperformed other indices in the region due to our large resources exposure e.g. Japan, Hong Kong, India, and Korea all fell between 2% & 4%. We saw over 75% of stocks on the ASX200 decline on the day but when the influential energy and resource stocks rally strongly it undoubtedly helps shore up the local index.
After opening the session higher, stocks were largely one way for the rest of the day closing down ~1% with the out of favour IT sector continuing to languish, ably supported in the sell-off by Healthcare. On the other hand, if you’re heavily into energy & gold you’re cheering with bullion +$US14 in Asia today, settling around $US1985 at our close, Brent Crude hitting ~US$130/bbl while industrial commodities in Asia continued to rally – more on that below.
We are adding to our existing position in Virgin Money (VUK) into recent weakness. We view the stock as oversold, offering value sub $3. Adding 2% will take it to a 6% portfolio weighting.
March kicked off with another week dominated by news around Russia’s invasion of the Ukraine while over the weekend we saw the Chinese Government set ambitious economic growth targets suggesting another bout of aggressive fiscal stimulus in an effort to offset both rising geopolitical tensions and their painful domestic property collapse – it was only back in the 2nd half of 2021 that China Evergrande’s debt woes made scary headlines but it already seems like an almost distant memory. The ramifications of Chinas 5.5% GDP target, which is well above the IMF’s 4.8%, suggests meaningful…
The ASX200 danced a similar jig to last week by looking good on Thursday morning only to unravel through Friday as the inconceivable crossed the newswires – Russian forces had shelled Europe’s largest nuclear power plant in Southern Ukraine setting it ablaze and leaving onlookers considering another Fukushima disaster. It’s very easy to comprehend the markets rising concerns when the New York Times ran a headline that an explosion would be the end of Europe – Vladimir Putin playing an extremely scary game that may still force the West to intervene.
Weakness into the weekend ruined what was nearly a perfect week. The local index was up 154pts to yesterdays close in the first 4 days, giving back around a third of the gains on the final day. A further escalation in tensions in the Ukraine was largely to blame for the weakness and as is often been the case, traders have looked to take money off the table at the end of the week rather than risk 2 days of news flow without liquidity. Despite that there was some support into the afternoon and the index finished +85pts from their lows around midday.
MM are selling PDN in the Emerging Companies Portfolio, taking a loss around 72c
The ASX200 again tested the psychological 7200 area late yesterday morning before drifting lower and ultimately surrendering over half of its morning’s gains to close up just 35-points for the day. We may be only 2-months into 2022 but MM’s view that the year would be characterised by significant volatility on both the stock and sector level is looking even more on point than even we imagined, a quick scan of some of the major winners & losers over the last 9-weeks says it all:
A choppy session for the ASX overall today with some big divergence between the haves and have nots, the Resources & Energy sectors again the beacon of hope while Healthcare and Staples tapered off. While it was a positive day overall, only around 50% of companies on the ASX finished in the green, and their were some big moves on either side of the ledger.
The ASX200 delivered a stellar performance on Wednesday by rallying 20-points in the wake of a 600-point plunge by the Dow – as we said yesterday “MM still feels that stocks want to trade higher”. We may have seen 65% of stocks decline yesterday but the stellar gains across the Energy, Gold and Resources Sectors was enough to carry the index higher. Some subscribers may have been surprised to see our sell alerts cross their screens yesterday but I remind you of a couple of famous investing quotes plus a personal favourite of one of the MM team:
