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The ASX200 continues to trade sideways in the face of a deteriorating COVID picture although it hasn’t actually been going anywhere since early June, well before the current Delta wave raised its head on our fair shores. Sydney registered its first case of this outbreak only 30-days ago on the 16th of June, it already feels a lot longer in the Gerrish household! As the the State and Federal Governments again dig deep to support individuals and businesses unable to work due to lockdowns optimism towards the speed of the economic recovery has waned but on the stock market level it’s only produced some rotation between sectors as opposed to core market selling.
The ASX200 has now completed 6-weeks of oscillating in the tight 7200-7400 trading range, it’s becoming increasingly tough to find something interesting to discuss from on index perspective as it remains comfortable meandering around in a small 2.5% band. However on the sector level things have been more interesting
Resilience is the first word that springs to mind to describe this weeks performance by the ASX with the index edging ~1% higher despite lockdowns for 50% of the Australian population. We’ve clearly got confidence in our ability to overcome this set back and/or the ability for Governments to underwrite the economic impacts.
We are making some amendments in the Emerging Companies, International Equities & ETF Portfolios. Please note, SMS alerts are only sent for changes in the Flagship Growth Portfolio. In that portfolio we are looking for further weakness to buy Oz Minerals (OZL) & Santos (STO), hopefully that plays out next week.
The ASX200 slipped lower yesterday, as we come into Friday “the song remains the same” with the local market very happy to simply rotate around the 7300 area whatever the macro / market news that crosses our screens. In what was a quiet session during an even quieter few weeks for stocks a few points did catch my attention:
The Match out: Stocks lower as lockdowns weigh, Gold stocks rally, Sydney Airports (SYD) rejects bid
A weaker session today with all market sectors lower bar materials & utilities, the former mainly supported by a good move in Gold which has broken out through the $US1800 handle to be trading at $US1831 at our close while the latter was a result of the takeover launched for Spark Infrastructure (SKI). The move in gold talks to the risk off mentality that was seen today as Melbourne is tipped to be entering lockdown. With the two main economic engines of the Aussie economy likely to be in lockdown the market gave back all of the early gains and some to close marginally lower.
The ASX200 enjoyed a solid Wednesday in the face of some negative leads as US stocks drifted lower and the local BNPL space was clobbered courtesy of Apple (AAPL US) – more on this later. Under the hood we saw ongoing mean reversion with the likes of Crown (CWN) and HUB24 Ltd (HUB), who both reside in the MM Flagship Growth Portfolio bounce strongly after struggling over the last few weeks i.e. pretty much a continuance of the trend across recent months.
A choppy session for Aussie stocks today with most focus on the Buy Now Pay Later (BNPL) sector that was hit on the back of news that Apple (AAPL US) was entering the fray, most players in the sector off ~10%. That weighed on the IT sector which fell 2.7% however that was pretty much entirely related to the BNPL companies while tech generally was positive while the Utilities was a standout up more than 3%.
The ASX200 again succumb to the almost magnetic pull of the 7300 level, the index has been rotating around this area within +/- 100-points for over a month but from my perspective it feels even longer! Yesterday saw the market forgo early strong gains to close basically unchanged with the Banking, Energy and Real Estate Sectors weighing on the ASX but the selling was very restrained with only 1 stock falling by over 3% i.e. no change, there are buyers of weakness and sellers of strength but neither appears particularly committed to their cause.
The market saw a strong open up ~50 points early on however sellers got the upper hand and stocks simply drifted lower all day before a big Market on Close (MOC) order hit which knocked 16 points from the market in the match alone. The broader industrials & utilities best on ground today however no sector added more than 1%, while the Real-Estate stocks experienced some mean reversion after yesterday’s strong performance.
