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Today’s Q&A note focuses largely on stocks that are underwater that MM holds across portfolios. Looking after / addressing the losers is very important when managing portfolios.
The best was seen in through the morning today with the market peaking over 6800 around lunch, only to give the bulk of it back into the close.
The ASX200 enjoyed a surprisingly strong Wednesday ignoring weakness in both the US and Asian Indices, although only just over half of the stocks rallied from an index perspective strength was at the right end of town with both Commonwealth Bank (CBA) and CSL Ltd (CSL) up by almost 2%. Weakness was again focused in the recovery and European facing stocks as the COVID situation deteriorates in many parts of the world, whenever I type words like this I think how lucky we’ve been in Australia.
The magnet at 6800 continues to attract the ASX today with early weakness bought into with particular focus on Healthcare and consumer names. The market closed ~20pts off its highs but still managed a 0.5% gain. Of particular note was the variation in performance across some of the banking names – CBA stood out with a gain of more than 1% while WBC was off 0.98% today.
The ASX200 again challenged the 6800 area early on yesterday only to spend the afternoon drifting lower on broad based selling, the tourism stocks garnered some especially harsh treatment e.g. Flight Centre (FLT), Corporate Travel (CTD) and Webjet (WEB) fell by an average of -3.8%. The market remains choppy and non-committed in both directions making it easy to adopt both a bullish & bearish outlook over 24-hours, overall we feel its best to adopt the attitude of “if in doubt do nowt”.
Not a lot to hang ones hat on today other than a cracking IPO by Airtasker (ART) which rallied 61% to close at $1.05 v the 65c listing (more about that tomorrow morning) plus a positive update from Katmandu (KMD) which pushed the stock up 9% – clearly retail continues to kick goals. More broadly, the market did okay early however it tapered off into the afternoon, closing a few ticks lower.
The ASX200 kicked off the week in good form closing up +0.7% as 65% of the index rallied and all sectors advanced except the resources which fell as iron ore tumbled over 7% at its worst. The greater their leverage to the bulk commodity the harder they fell from RIO Tinto (RIO) -1.2% to Fortescue (FMG) -4.3% and Champion Iron (CIA) -10.1% at the extreme, as the sector falls out of favour we are slowly becoming more interested but we’re in no hurry, just yet.
The market was more upbeat than the weather today as stocks opened near the lows and made headway throughout the session to close near enough the highs. An $8bn private equity bid for Crown Resorts (CWN) seemed to buoy confidence in the broader market while 3 sectors put on more than 2% a piece, namely Energy, Utilities and Healthcare. The index would have done a lot more if the influential Materials & Financials joined the party, however they were the two weakest sectors, the materials ending down 0.47% the only sectors actually closing lower thanks to a 7% decline in the Iron Ore price as more environment controls in China are tipped to hurt Steel production and therefore demand for Iron Ore.
The ASX200 struggled last week even while US indices scaled fresh all-time highs, Europe posted new COVID highs and Asia was stable. The -0.9% fall locally was largely caused by the value end of town as Banks & Resources surrendered some of their recent gains with the likes of BHP Group (BHP) and RIO Tinto (RIO) both falling over 6%, however the interesting side of the coin is bond yields continued to rally posing the question – “are value stocks pre-empting a pullback / period of consolidation in bond yields?”. Subscribers know our view on this subject hence today I’ve looked at a few different pockets of interest to keep our finger on the financial markets pulse.
Last week again felt like tough going for the ASX200 as we slipped ~1% over the 5-days with some rotation back from value to growth stocks evident under the hood. Over the last few weeks the local market has failed to embrace the push to fresh all-time highs by most US indices leaving us neutral to negative over the coming weeks with another test of 6500 for the local index looking a strong possibility as the Banks and Resources Sectors surrender some of the 2021 gains i.e. now only 3% lower.
