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Global equities continue to follow good old fashioned corporate earnings while dismissing short-term worries around COVID along the way. Bull markets view news flow through rose coloured glasses and that’s exactly what local stocks have enjoyed since their latest rally commenced back in 2020, 10-months and an impressive 1747-points / 30% ago:
A very quiet day for the index, trading in a tight ~25pt range for the most part before a lunge higher on the close. The sector level was a different story though with tech continuing to be dragged higher by Afterpay (APT) while materials offset strong gains elsewhere, finishing 1.2% lower on weak iron ore prices. The index was up almost 2% this week – on a tear.
We are selling Rhipe from the Emerging Companies Portfolio, along with Ping An & buying Deere & Co in the International Equities Portfolio.
Thursday delivered a steady session for the ASX200 which finally closed at another new all-time high although it didn’t feel like that sort of day with no stocks moving in either direction by more than 3.5%. If we were to try and dissect the meagre +0.1% advance it would be a case of gains by the Banks and Real Estate stocks was more than enough to offset losses in the Resources names. The market feels like it’s slowly starting to accept the new 7500 handle just as it did 7200-7400 and 6900-7100 trading ranges earlier in the year.
The ASX quickly shrugged early weakness to trade above 7500 for much of the day – setting a new record for highest close in consecutive sessions now despite major sectors of materials and energy both more than 1% lower. For now equity markets seem to have little concern around lockdowns and case numbers instead buying the vaccine take up along with the government support narrative despite Victoria now facing another lockdown.
The ASX200 enjoyed a solid session on Wednesday basically closing on its all-time high, although only 55% of stocks rallied when the major banks and miners advance it’s going to be another win for the bulls. Fresh bad news is rapidly becoming increasingly thin on the ground clearing the way for further gains into Christmas for an index which has already rallied +13.9% so far this year. At MM we are bullish equities with the path of least resistance clearly to the upside, a few other additional statistics to the ones recently mentioned are also catching our attention:
The market pushed up and closed above the 7500 handle today making a new all-time closing high in the process and is now up ~70% from the panic low (4402) on the 23rd March 2020. While it’s easy to conclude that the market has run too hot, earnings have been the driver of the move rather than just an expansion of multiples, or in other words, the rise is justified. Index earnings per share (EPS) peaked pre-COVID at 345, dropped to 250 and is now sitting at 375…
The ASX200 drifted lower yesterday although it was primarily a lacklustre session by the banks which caused the -0.2% decline. Under-the-hood the local tech space remained the hot place to be after being ignited by the $39bn takeover bid for Afterpay (APT) on Monday, the biggest corporate play in history, perhaps we’re finally going to see the local IT stocks address their major underperformance when compared to the US FANG’s & Co through 2021 – more on that later.
The ASX 200 slipped 0.2% from yesterday’s all-time high today although the technology sector was strong thanks to more buying amongst the BNPL stocks offset by weakness in the Energy & Materials sectors. Central bank chief Philip Lowe surprised the market this afternoon by pushing on with a reduction in their weekly bond buying program (i.e. easing back support) despite the economic impact of lockdowns. The market thought this…
We are taking a nice profit on a relatively expensive stock in the portfolio today, reallocating into a value orientated company after a recent pullback.
