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The ASX200 started to show a few hairline cracks yesterday with strength early on sold into as ~60% of the index finished lower after hitting another all-time high at 7334.
A new intra-day high was set for the 5th consecutive day today, however early strength was sold into and the index eventually closed lower. Staples were the main drag on the index, closing almost 1.5% lower on softness in heavyweights Woolies and Coles. Materials found some form with strong base metals and iron ore prices, though gold names lagged the sector.
We are making some amendments across most portfolios as foreshadowed in this mornings note.
The ASX200 continues to rally steadily with the seasonal concerns around May well and truly behind us, since Februarys low ~6500 the index has gained well over 3% p.m. with no obvious end in sight, if anything the moves gathering momentum after clearing the 7000 hurdle. Tuesdays 10-point gain wasn’t particularly exciting but with meaningful sellers remaining firmly on the sidelines it’s more a matter of which sectors drag us higher with the IT & Healthcare stocks more recently best on ground i.e. the growth plays.
An positive day overall for the market with the index edging higher, although we are starting to see some transition from the ‘reflation’ trade back into the technology and healthcare stocks that are starting to enjoy consolidation in global bond yields, a theme we’ve been flagging in recent reports.
The ASX200 again scaled fresh all-time highs on Monday but on a day when the banks struggled following regulator AUSTRAC’s investigation into money laundering at National Australia Bank (NAB) it was one step too far for the index to close above 7300.
The ASX ended lower today, although it did trade up to a new intra-session high on the ASX 200 hitting 7309 in early trade. The IT stocks bounced back today with the sector topping the charts (+2.8%) thanks largely to a 39% gain from Altium (ALU). Chinese trade data came out mid-morning that was a little light and that prompted some tentative selling in the market, although I suspect it’s more a case of the market becoming tired around all-time highs.
This morning the ASX200 appears poised to again test the 7300 area, if we assume the local index has already seen its low for June and the last couple of months have set the benchmark for the current breakout by Australian stocks investors should expect to see a test of 7400 in the coming weeks, a move that shouldn’t be hard to comprehend as the banks maintain their bullish charge, the average gain of the “Big 4” in 2021 is already over 28%, and that’s before we even consider their attractive dividends.
The ASX200 has kicked off June in similar fashion to the previous 3-months, its less than one week old and the index is already up almost +2%, the banks have maintained their upside momentum while being solidly supported by the broad market with the exception of the IT stocks which are still doing it tough. Bond yields and interest rates might have been treading water for the last 12-weeks but fund managers are clearly still rotating their portfolios towards a strong economy / higher interest rate environment
The shackles have been broken on the ASX this week and today was no different. There were a few stumbles early, but the afternoon was dominated by the bulls with 7300 in their sights.
