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After only 7-weeks 2022 has certainly felt like a volatile year but a quick glance at the Volatility / Fear Index would question this interpretation, we may have experienced plenty of action above the average of the last 10-15 years but we haven’t witnessed any sheer panic as we did when markets fell in 2018 around bond yield concerns or like the chaos after US Debt Downgrade in 2011. We have 2 theories why the escalation in volatility has been relatively orderly:
The ASX200 again fell 1% on a Friday, it’s becoming an end of week habit! Its very easy to understand why investors / traders were scared to go home exposed this weekend as Monday is Presidents Day in the US making it a 3-day weekend for stocks i.e. plenty of time for further escalation of geopolitical tensions around the Ukraine. You could actually feel the realisation kick in at 3.30pm yesterday, the ASX was holding up really well considering previous falls on overseas bourses but in the last half an hour we succumbed to nerves and dropped almost 50-points to forgo the week’s gains.
A weaker session today for the ASX with much of the weakness coming late (as the intra-day chart below shows) however given the uncertainty on the geopolitical front, the market falling 1% was a reasonable effort, particularly into the weekend + the US is on Holidays Monday. Gold was the standout however there was also some interesting moves from a stock perspective with two stocks we hold in our Income Portfolio, namely Smart Group (SIQ) and Magellan Financial…
The ASX200 managed to close out Thursday in positive territory but only just after US equity futures turned lower following reports on social media alleging that Ukrainian forces had shelled Russian forces in the self-proclaimed Lugansk People’s Republic – the unconfirmed news reports came from the Sputnik Russian state-affiliated media. The rumours quickly wiped away 85% of the local markets midday gains with the drop illustrating the manner in which heightened geo-political tensions…
A bullish morning of trade with local reporting season underpinning strength, it certainly seems corporates are doing well overall, plus we’re seeing many with the confidence to issue guidance which was a concern ahead of results. However, reports that Ukraine was shaping up to Russia skuttled that positive undertone and stocks fell into the close – the ASX 200 down around ~70 points from the intraday high.
The ASX200 enjoyed a strong session on Wednesday although it was struggling into lunch as the “sell the strength” mentality that’s dominated most of 2022 took hold as S&P500 futures wobbled however solid broad based buying from 11am pushed the market higher and the index finally closed up more than 1% with 85% of stocks closing positive for the day. A few weeks ago we targeted some consolidation in the 7200 – 7400 region, in hindsight we underestimated how much it needed a rest and its been an even tighter range but still an encouraging…
A great session for the ASX keying off strong leads from overseas as Russia took a tentative step backwards while strength on the domestic earnings front also buoyed the market, the Healthcare index +6.22% higher the standout thanks to our 3rd largest listed company (CSL) beating expectations and rallying more than 8%.
Tuesday saw the ASX200 drift lower through the afternoon to finally close down 0.5%, again we saw more stocks in the losers corner but it was another sharp decline by iron ore, and its related miners, which overshadowed a recovery by the tech names. BHP Group (BHP) was the best of the bunch only slipping 0.3% after delivering a solid scorecard yesterday as it showcased the fruits of rising commodity prices for miners – if inflation & interest rates have bottomed we could indeed be in the early stages of a “Super cycle” for the Resources Sector.
As Chris on the Insto Desk just over my shoulder said today, it felt like the market was down a hundred with some big moves on the stock level playing out and some decent divergence between sectors. By the close, the market held above 7200, not a bad effort considering that Iron Ore prices melted ~10% in Asia.
The ASX200 put in another solid performance yesterday to start off the week by ignoring Fridays 500-point plunge by the Dow to close up an impressive 0.4%, as we’ve said previously the more time the index can consolidate above 7200 the higher our conviction becomes that it can test 7600 in the coming months. However yesterday’s buying wasn’t broad based with only 42% of the index closing in positive territory but when the banks are extremely strong it usually translates to gains in the index e.g. Westpac (WBC) rallied +4.8%. We feel like the ASX wants to rally but overseas jitters around…
