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MM are making several changes to the Active Growth Portfolio today
The ASX200 fell to a 5-week low on Thursday, ultimately closing down 1.1%, extending the current pullback to 328 points / 3.8%. Losses were focused in the big end of town, with the banks again suffering after failing to satisfy lofty expectations moving into earnings season.
The market opened lower this morning and the selling fed on itself as several results underwhelmed on the busiest day of the reporting period. While there were some solid updates, Whitehaven, Telstra, Megaport and others, more underwhelmed, amplified by ongoing weakness in the banks, the majority trading ~3% lower.
The ASX200 dropped another 0.7% on Wednesday with the banks accounting for 85% of the decline. The market has dropped over 200 points/2.6% since MM adopted a neutral stance last week, but we’re in no hurry to “buy the dip” just yet.
A tough day at the office with more misses than hits on the earnings front and some big negative share price reactions to boot. While CBA traded ex-dividend ($2.25 FF) falling $3.66, the sector was under pressure courtesy of a weak quarterly update from NAB with the big banks accounting for 52 of 61point decline on the main board.
We are making several changes across portfolios
Tuesday’s interest rate decision and accompanying commentary was one occasion we weren’t overly happy to be correct on; MM has written a few times recently that the RBA should and will cut rates by 0.25%, but we expected a cautious tone and only one more cut in 2025.
The most anticipated RBA meeting in recent memory delivered as expected today, with RBA Governor Michelle Bullock cutting rates, but said future cuts are far from assured. In other words, the market has gotten ahead of itself pricing in multiple cuts this side of Christmas. Stocks were lower after the announcement and the AUD moved higher.
The RBA cut rates this afternoon by 0.25%, the first policy change since late 2023. Pressures have been building on the independent RBA for weeks, and no cut would have reverberated negatively across the economy and financial markets. Forecasting interest rates is fraught with danger, but a less restrictive Cash Rate of around 3.5% feels more on point in today’s environment, where many Australians are hurting financially.
The ASX200 slipped -0.2% on Monday, a reasonable performance considering the weakness in the banks dragged the market down ~0.9% at its worst. More on the banks later, but their influence was evident, with weakness across the sector weighing on the broader market.
