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It was another tough week for local stocks, with the ASX200 closing down another 2%, extending the aggressive pullback to 10.2%, the market’s largest 4-week decline since 2020. Eight of the eleven mainboard sectors declined, spearheaded by the tech, healthcare, consumer discretionary, and financial sectors, all of which fell over 3%. Performance reversion was again the main game in town, with the resources performing well at the expense of many high-flyers over the last year.
With futures pointing down -12pts prior to the session following weak US markets, it looked all but certain we were in for another negative day but fresh all-time highs for gold and a bounce in iron ore overnight provided a much needed boost to the miners.
The ASX200 struggled again on Thursday, reversing early gains to close down 0.5%. The local market received a one-two on Thursday, the US futures reversed lower, and Morgan Stanley downgraded its rating of Australian equities to underweight, highlighting concerns over Australia’s exposure to trade war risks and elevated valuations – we feel like they are late to the party!
The market was higher this morning coming off a positive overnight session in the States, though, US Futures tracked lower during our time zone weighing on our market as the day progressed. The last three Friday’s have also been particularly weak so understandable that traders are nervous making any big bets on the penultimate day of the week, the index currently down ~2.5% since Monday.
The ASX200 plunged another 1.3% on Wednesday, making it official that the tariff pullback is now a correction. The market has fallen more than 10% from its Valentine’s Day high – excuse the analogy, but it does feel like a “Valentine’s Day Massacre,” which coincidentally unfolded in Chicago in 1929, the year of one of the most significant stock market collapses in history.
Another tough session today sees the ASX200 trade to the lowest level since August 24, officially entering correction mode off 882pts/10.2% from the high set on the 14th of February.
We are making several changes to portfolios.
The ASX200 closed down 0.9% on Monday, posting a seven-month low in the process, though it managed to bounce ~1% from its intraday lunchtime low. The index had extended the past month’s pullback to 9.3% – just shy of an official correction (10%).
A tail of two sessions today with extreme weakness this morning pushing the ASX200 down ~150pts early before a spirited come back saw the market finish ~100pts up from its nadir – buy the dip was alive and well underpinned by a recovery in US Futures which were down 1.6% before trading higher by our close.
The ASX200 limped higher on Monday with little conviction as US S&P500 futures and Asian equities peeled away after some unconvincing comments from President Trump in an interview that aired Sunday US time.
