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Australian stocks are knocking on the door of our technical breakout level and as subscribers know we believe fresh highs are likely into Christmas, our best guess is around 5% higher. However subscribers also know we like to look into the future, especially in today’s rapidly evolving market – its amazing what the ASX has already delivered in 2021 e.g. BNPL stocks moved out of favour while lithium returned back to the limelight, crude oil surprised everyone on the upside but iron ore halved in a few weeks while bond yields had some of their most explosive weekly moves in history. What we feel comes next is both exciting and potentially scary for those not prepared.
The AX200 rallied almost 2% last week as bond yields fell even after the RBA abandoned its “yield curve control policy”, the impact is going to be felt by many homeowners with fixed rate mortgages already being hiked this week e.g. St George’s fixed 3-year increased from just over 2% to 2.39% courtesy of the RBA no longer anchoring local 3-year bond yields to 0.1% plus for good measure they’ve started to prime the market for potential rate rises in 2023.
A choppy start to the week ended with 3 solid sessions of gains for the ASX, today it was the Communications sector leading the charge while the IT stocks lagged. For the week, the market added 1.17% with all sectors bar Energy & IT booking gains.
The ASX200 rallied 0.5% on Thursday as the Financial & IT Sectors teamed up to drag the index towards fresh 4th quarter highs, it doesn’t feel like it but we’re now only 2.7% away from new all-time highs and its slowly starting to feel like when, not if, we reach that milestone. The stock and sector rotation might be dominating the tape day to day and week to week but there’s a distinct absence of sustained selling unless a company, or sector, receives some meaningful bad news e.g. Dominos (DMP)…
A 2nd day of gains for the ASX as the market edged another ~0.5% higher thanks largely to a bounce-back in the IT stocks that never seem to stay down for too long, while weakness in Oil prices and the prospect of higher output saw the energy sector sold off.
We are switching from NAB into Bank of QLD (BOQ) in both the Growth & Income Portfolios
In the Emerging Companies Portfolio, we are selling Wisr (WZR) and buying Audinate (AD8)
We are buying Freeport McMoran (FCX US) in the International Equities Portfolio
The ASX200 rallied 0.9% yesterday although as has often been the case recently it peaked at midday before drifting 40-points through the afternoon following a nervous lead from US futures – unfortunately at the moment we’re embracing weakness in the US with far more enthusiasm than strength. Gains were encouragingly broad-based on Wednesday with over 70% of stocks closing up on the day with line honours going to the recently under pressure resources and financial stocks, it was also…
The ASX bounced back today with the heavyweight Materials & Financials leading the line after a tough start to the week, IT the only sector to finish lower. Buying was fairly broad based, ~75% of the ASX200 finishing higher and as we touched on this morning, some recovery started to play out amongst the beaten up bulk miners even though the underlying commodity prices remained on the nose.
The ASX200 again surrendered early gains on Tuesday and we ended the day down 0.6% with around 65% of stocks closing in negative territory, not a good Melbourne Cup for Australian equities. The value stocks were the standout losers as the market continued to worry about rising interest rates stifling global growth i.e. Financials -1.3%, Energy -1.1% & Materials -2.1%. China also continues to pressure the influential Australian iron ore and coal names but with panic comes both market tops and bottoms and as subscribers…
While the short odds favourite failed to get up in the cup today, the decision by the RBA at 2.30pm this afternoon to scrap yield targets and remove guidance for 2024 rate hikes was expected and that saw both bond yields and the AUD tick lower post the announcement.
The ASX was soft during early trade today, it bounced as the RBA took some uncertainty away but that didn’t last long and we sold off into the close, the material stocks providing the biggest drag as China facing commodities took a beating, Iron Ore limit down and Coal prices continued to slide. Don’t fight the PBOC the clear message at the moment!
