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Stocks will be glad to see the back of January which saw the local ASX200 fall over 11% from its monthly high of 7620 to its low of 6758 with Healthcare and IT Sectors leading the descent e.g. 50% of the Australian tech names are already down over 20% year to date. The steep decline has made the quarterly range one of the largest in the last decade, especially if we remove the initial panic when COVID first entered our lives back in early 2020. However the declines have been very broad based with 13% of the ASX200 currently in the black while the unpopular Energy Sector dominates the winners…
The final trading session for a tough January saw the ASX track marginally lower, although there was some buying obvious into early morning weakness particularly in some of the beaten up technology stocks while the resources cooled. For the month, the ASX 200 fell -6.35% however there was some huge divergence between sectors, Energy +7.88% for the month while IT fell by -18.43% and Healthcare was off -12.13%. More on these stats below.
We are cutting 2 positions in the portfolio to re-allocate those funds across existing positions that we believe are oversold.
Last week saw a continuation of Januarys surge in volatility but we feel it’s probably gone too far, at least short-term, with any further dips by equities in the coming weeks reasonable buying for active investors:
The ASX200 enjoyed a selling reprieve on Friday which allowed the market to recover over half of the weeks losses but one days bounce most definitely doesn’t herald an end to the months 11.3% plunge, at this stage we feel another test of 6700 is the more probable scenario before we can see a more sustained recovery i.e. the markets looking for as opposed to found a low.
The penultimate session for January did see almost 85% of stocks rally on a day which felt like a definite relief rally but ideally we would like to see the market exhibit some strength into “bad news” before MM would feel confident we had seen the low for Q1.
An aggressive bounce back today for local stocks with the ASX 200 ripping +2.19% higher recouping all of yesterday’s declines and some. Stocks opened higher, sold off fairly hard then spend the rest of the session rallying with the buying broad based. We wrote this morning that significant market crashes occur for a reason, whether it’s a credit event like the GFC via subprime loans or a global pandemic that forces an economic shutdown, for now, in MM’s…
MM are making some changes to the portfolio today to increase the quality of companies we are exposed to.
We are trimming our large BHP position back from 9% to 6%, cutting both of QBE Insurance (QBE) & NRW Holdings (NWH) for loss as we see better risk adjusted returns buying Aristocrat (ALL), Macquarie Group (MQG) and adding to our existing position in Goodman Group (GMG).
Equities have been hammered over the last 2-weeks as concerns that higher inflation is set to spark rate hikes across the globe gathered momentum and understandably / logically the high valuation growth names have borne the brunt of the selling. Thursday saw a 4% intra-day bearish turnaround as margin selling appeared to roll through the market after 11am, a short-term panic style bottom feels close at hand, or even in, and we should remember that seasonally buying a January pullback and holding into early Q2 has a great historical track record. I recently read an article by Shane Oliver…
A rollercoaster ride for the ASX today, to trade in a huge 284pt/4.1% range, falling to levels not since April 1st last year. With the latest tumble the fall from the 5th of January high of 7620 extended to 862pts/-11.3%. Growth sectors were the shining light early on, before becoming the main drags in the afternoon as the market rolled over – unsurprising given the headlines of higher inflation and higher rates driving markets. Aussie 10-year…
International Equities Portfolio: Selling BHP in London only, and buying Alphabet (GOOGL US)
Macro ETF Portfolio: Adding to ACDC
