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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…
There was some nervousness this morning following a big weekend of negative news around the potential Ukraine invasion, no doubt amplified by many of us forgetting Valentine’s Day, however after a weaker open, stocks were well bid led by Gold & Energy shares while the banks were also well supported. Overall, a solid, somewhat surprising session on a day where the LA Rams won the Super Bowl.
By the end of last week we saw the Ukraine takeover from inflation as the main driver of market sentiment & focus. Local equities managed to finish the week with reasonable gains but US indices succumbed to increasing tensions between Vladimir Putin and most of the developed world with Fridays losses dragging indices into negative territory for the week. The huge swing in investors / traders focus was most noticeable in bond yields:
The ASX200 fell 1% on Friday as concerns around inflation and rising bond yields again came to the fore as the US CPI (inflation) hit a 40-year high providing ammunition for some hawkish economists to forecast a full 1% interest rate increase by the Fed over the next 3-months. As we’ve said repeatedly over the last 18-months interest rates are going higher, the only question is how fast and the markets have now positioned themselves for an aggressive & fast series of hikes. However not everything was bad news for stocks and there are some fascinating scenarios unfolding on the stock / sector level:
The market gave up ground, though still managed to post a +97pt/1.36% gain for the week. A soft lead from the US driven by higher than expected inflation prints caused early weakness. Selling picked up throughout the morning thanks to a more aggressive tone from RBA Governor Lowe who said a rate rise this year was plausible, sending the market back below 7200 before some support kicked in. The ASX eventually closed 26pts off the intraday lows.
The ASX200 rallied 0.3% on Thursday although unfortunately it lost around 70% of its early morning gains as profit taking appeared to roll through the broad market with over half of the market finally closing down on the day. The local index has already rallied 2.3% this week and 4.5% this month hence its not surprising a few nervous investors / traders took some money from the table, remember it was only 2-weeks ago the market was in the middle of an 11% plunge that had most commentators discussing bear markets. Our best guess is the index now consolidates recent gyrations in the 7200-7400 region but overall our preference is…
A strong start to the day with buyers picking up where they left off yesterday afternoon. The ASX was carried back over 7300 for the first time in 3-weeks but ultimately failed to hold that level closing 48pts off the intraday highs. Tech was once again the winner, carried by strength in the larger index weights of the sector. Market heavy weights of Financials and Materials were also well bid, helping to ensure a green day for the index.
