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SPI Futures were pricing a good bounce this morning up ~70pts, however, that didn’t materialise as investors seemed to focus on the growing prospect of a US recession amid ongoing trade frictions.
President Donald Trump campaigned on a promise to lift what he called an ailing US economy, although the data and stock market said otherwise. Last week, he suddenly warned his much-beloved share market that some pain might be on the menu before things improve.
Friday’s sharp 1.8% sell-off compounded what had already been a tough few weeks for local stocks. Last week saw the ASX200 accelerate lower, extending its decline from its mid-February high to 7.8%. Much of the damage was inflicted by the outperforming, high-value stocks that have driven markets over the last two years, such as banks, retailers and tech stocks.
A soft end to a tough week in markets with the ASX now off ~8% from the high set on Valentine’s Day (8615), closing sub 8000 at 7948, a 6-month low. Over 80% of the market fell, with very few places to hide. The selling was Aussie centric, obviously, weakness overnight played into it and being a Friday creates a void of buyers, but we were not being pressured further from weakness overseas during our session.
The ASX200 endured its third daily decline on Thursday, finishing 46 points lower. However, the heavyweight miner’s BHP, RIO, and South32 all traded ex-dividend, along with oil giant Woodside (WDS), exacerbating the weakness and illustrating why charts can only be used so far before we must bore down into the markets’ nuts and bolts.
All signs pointed to the ASX following U.S markets higher pre-session but it was the weaker energy space and a few big hitting ex-divi names that dragged the index lower – BHP’s dividend accounted for 12 index points by itself with Woodside, Rio Tinto and Commonwealth Bank among the heavyweights entitling shareholders to dividends today and seeing cash flow out of the market.
The ASX200 retreated another 0.7% on Wednesday, with over 70% of the main board closing lower. Although it was encouraging to see equities bounce from their lunchtime low when the index was down over 100 points, the reality of Trump’s tariffs has shaken stocks in the last three weeks, and he apparently has not finished yet.
The ASX fell again today, though the decline was more lethargic than aggressive as Trump delivered the longest joint address to Congress in the last 60 years (~90 mins long) while China confirmed an about 5% growth target and an expansion of the deficit to 4%.
We are making two changes to the Active Growth Portfolio today.
The ASX200 struggled again on Tuesday following a tough session on Wall Street, although the -0.6% decline was significantly better than the US S&P500, which tumbled -1.8% as the large-cap tech names received attention from the sellers.
