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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.
The ASX200 rallied strongly yesterday following a good result and subsequent surge by Commonwealth Bank (CBA) – the company beat market expectations by around 5% which led to a 5.6% advance by Australia’s 2nd largest stock. The bank will be trading ex-dividend, $1.75 fully franked next week which must be very tempting for the yield hungry investors. The sentiment which emanated from CBA’s result was far reaching with 87% of stocks posting gains, only the Energy & Materials Sectors slipped slightly after…
A tepid start to trade this morning however the buyers stepped out of the shadows around 11.30am and pushed the market up +80pts from the lows, the IT stocks leading the charge with some impressive gains from the ‘on the nose’ sector while a strong result from Commonwealth Bank (CBA) underpinned a rally amongst the financials. All in all, the bulls won on the day with the ASX 200 now up +510 points / +7.5% from the low set on the 27th January.
Tuesday saw the ASX200 rally over 1% with more than 70% of the index closing in positive territory but it was the gains in the stocks / sectors where it mattered that pushed the index back towards 7200 i.e. the banks, BHP and CSL all rallied which outweighed another weak session by some tech names. BHP now makes up more than 10% of the ASX200 and its 18.5% rally in 2022, supported by gains in iron ore & energy, has certainly cushioned the falls in the tech space.
