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MM are amending our Flagship Growth & Global Macro ETF Portfolios
The ASX200 slipped -0.3% yesterday with the banks weighing on the index while the less influential tech space rallied another +2.4%, the winners & losers were evenly matched on a day when bond yields continued to dictate terms under the market’s hood:
While large-cap Australian shares fell today, the small caps took over the performance mantle with some big moves playing out across the growthier parts of the market, the small ords added +0.83% versus the ASX 200 which fell by 0.32% although the selling was very tepid. Putting that variance in real terms, that saw our emerging companies portfolio add around ~3.70% versus the large-cap growth portfolio which fell by around ~0.10% – some…
As I’m sure everybody knows by now that on Tuesday the RBA hiked local interest rates by 0.5% for the 3rd consecutive month, taking the Official Cash Rate to 1.85%. However there was a noticeable change in their rhetoric with Philip Lowe stating that the path ahead “is a narrow one clouded in uncertainty” and “that the board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it’s not on a pre-set path” – overall it sounded like he was echoing recent comments from the Fed as central banks clearly start…
Another solid session for the ASX with the market rallying after the RBA raised rates by 0.50% (as expected) to 1.85%. They also amended their language somewhat to imply that future hikes were not set in stone, a very similar approach to the one adopted by the US Federal Reserve last week when they hiked by 0.75%. The retailers did best, both discretionary and staples while IT stocks also rallied.
The ASX200 rallied another +0.7% on Monday taking the index within a whisker of the psychological 7000 level although it was interesting to see the defensive stocks dominating the winner’s enclosure as opposed to the high beta growth names i.e. Utilities +2%, Healthcare +1.6% and Telcos +1.4% whereas the Consumer Discretionary -0.2% & Tech Sectors -0.4% slipped marginally lower. However at this stage MM is not reading anything into this minor sector rotation, it simply felt like some book squaring ahead of the RBA’s much-anticipated rate hike at 2.30 pm this afternoon:
The ASX continued to climb the wall of worry today, opening near the session lows before grinding higher throughout the day to close on the high, just a whisker below 7000. Utilities & Energy were strong while some profit taking played out in the IT stocks which had bounced well from their recent lows.
The Fed raised interest rates another 0.75% last week but just a few words were enough to change the crowd’s hawkish mindset which not surprisingly sent major ripples through financial markets i.e. bond yields slipped, equities rallied and the $US fell which helped kick start the commodities back into gear:
The ASX200 rallied over 150-points last week taking the local markets gain to more than +5% in just 2-weeks, investors switched in earnest from defensive stocks & sectors just in time for MM to trim a few positions as indices reached our initial target for July. Interestingly it wasn’t the tech stocks which benefited on falling yields as the market continues look beyond the obvious, or perhaps simply 6-months in advance i.e. resources benefitted on the premise that central banks would be easing off on the rate hikes to avoid a recession.
Falling bond yields have helped the risk on sentiment continue for equities with the local market once again hitting a 6-week high, as it closes in on the 7000 level. All sectors bar Healthcare joined in on the rally, though Real estate found the most support today. Local equities piggy-backed on the strength in the US market overnight thanks to weaker GDP numbers and a more dovish tone from the Fed earlier in the week. Bond yields fell significantly today with Aussie 2-year yields down around 15bps to 2.42%.
