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The ASX200 got it’s mojo back this week and yesterday closed at it’s highest level since the pandemic broke late in the first quarter of 2020. It seems the shackles tying the index to the 6800 handle have now been cast off and thankfully we have some clear air ahead of us.
A choppy session for the ASX today with a fairly deep sell-off into a lunchtime low before the market moved higher throughout the afternoon, closing at new post COVID highs. Ultimately the market looks primed to breakout on the upside with the ASX 200 now only ~1% below the 7000 milestone.
As discussed in the AM note this morning, we are making some amendments across the Flagship Growth Portfolio and the two International Portfolios today / tonight.
The ASX200 rallied yesterday up through the 6900 level only to falter in late trade to close marginally below the fairly insignificant milestone. Not surprising really given we’ve had a handful of attempts at a breakout only for it to fail and the market to fall back into the trading range that has held firm for more than 5 months now.
The ASX 200 saw the best of the days gains in the morning with a high of 6915, the highest level in six weeks however sellers emerged and we ended around 30points below the session high.
Following the longest break of the year for the ASX, we’re tipped to open higher this morning as global markets break to new highs with a confluence of better economic data and news of further stimulus in the US last week creating a strong tailwind for risk assets. Last week saw the resumption of the trends that played out in 2020, namely outperformance by the growth / technology stocks and underperformance of value.
Last week wrapped up Q1 of 2021 with the local market adding 3% for the 3 months, not a great effort given the backdrop of US markets which were up closer to 8%. We continued to see the broad trading range play out on the S&P/ASX 200 roughly between 6500 & 6900. When a market trades in a consolidation range for a number of months, the longer it stays there the more significant the eventual breakout is when it happens, sort of like a spring getting compressed until the pressure is released and bang, it propels itself in one direction or another.
The market held on to gains today for what feels like a week long struggle against sellers that appear in the afternoon.
The first quarter of 2021 is behind us and after 3 extremely choppy months on the stock & sector level the ASX200 itself has managed to advance 3%, or an average of just 1% per month. The determining factor of sector performance year to date has been the sharp appreciation by longer dated bond yields as markets factor in a major post COVID economic recovery.
A positive session to round out the month and quarter for Aussie stocks, although there was a massive MOC (market on close) order that saw the ASX 200 fall 30 points in the match (between 4pm & 4.10pm).
