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The AX200 waved goodbye to September on a positive note only for October to start with a 2% plunge, history tells us this is usually an excellent time to start accumulating stocks but as is always the case near lows equities certainly feel vulnerable to further declines. Investors have started considering the attractive dividends on offer from the banks in November plus of course the much anticipated “Santa Claus Rally” but there are a couple of important hurdles to be cleared
The ASX suffered a brutal session following US Indices lower to start the 2nd quarter of FY22. Infighting in the Democrats appear to threaten both infrastructure spending and an increase to the Government borrowing cap. We have seen all of this before, it’s political posturing that generally gets resolved however the infrastructure package is very important which is the curve ball in these negotiations.
The ASX200 finally found its mojo on the last day of September rallying 1.88% on broad based buying which ultimately saw 86% of stocks close in positive territory, the “Big 4” banks caught my attention gaining an average of 2.4% – perhaps we have a clue as to what sector could drag the index to fresh highs, as we said yesterday moving forward the heavy liftings likely to be relatively concentrated. COVID has already become old news as far as financial markets are concerned, Thursday saw awful…
The market ended a soft month of September with a bang today rallying ~1.9% with broad based buying right across the board and a very bullish close to finish on the daily and weekly highs, smashing back up through 7300 in the process.
As we approach Q4 the question being asked by many is can the AX200 again rise from the ashes, yesterday it was battered for the 2nd successive day as September looks set to live up to its bearish reputation, the index is sitting down 4.5% with just today’s session remaining. Stocks have been caught with a classic “1-2 combination” as the deteriorating macro picture threatens to derail the liquidity driven bull market:
Another weak session today saw the ASX end down more than 1% – the same culprits dragging the ASX lower, IT & Healthcare however Energy was also on the wrong side of the ledger today after a very strong run of late. As we discussed this morning, bond yields trading at 3 month highs is starting to unnerve investors while J Powell’s commentary around higher inflation further fueled that view.
We are tweaking the Flagship Growth & Income Portfolios in this Alert.
MM talked about the ASX200 rotating around the 7400 area in Tuesdays “What Matters Today” Report only for it close under 7300 just 7-hours later as broad based selling rolled through the index – in hindsight the local index again called the overnight drop in US stocks perfectly . The losses were focused in the interest rate sensitive growth stocks such as Healthcare -3.6% and Tech -2.9%, importantly if MM is correct and bond yields are going to maintain their upward momentum into 2022 the rotation out of growth into value names should be ongoing – our portfolios which…
Well, it seems there’s very little middle ground in the market at the moment with another ~100pt selloff coming on the back a few strong sessions – the 3 steps forward 2 back mentality we’ve been writing about in recent notes seems on point. Today it was weakness in the high value names, the growth areas of IT & Healthcare which really weighed the broader index which is a function of rising bond yields globally.
The ASX200 enjoyed a solid start to the week although it did experience some pretty aggressive selling into the close which aligns with our view that the strong post COVID rally is maturing i.e. some sellers are appearing into strength. While the banks led the charge on Monday they were very well supported by the “re-opening trade” as Gladys looks to put COVID well and truly into the rear view mirror – as she said “living with COVID won’t be easy but its manageable”. At this stage we continue to believe the…
