Archives: Reports
Wednesday saw the ASX200 retreat for the 3rd consecutive session as high US bond yields and inflation concerns post-Trump landslide victory weighed on market sentiment.
A good fight back from the ASX today and it was a deviation from recent trends with the majority of resources stocks finding some interest into the morning lows, the market down ~100pts at it’s worst before recouping 40% of the decline.
China attempted to give equities a shot in the arm on Tuesday but it was extremely short-lived. We expected the “China Trade” to pullback after its aggressive rally in late September but the retracement has been deeper than anticipated with the market now firmly in a “glass half empty” mood
A weak open to trade this morning, though the index clawed back the majority of losses to finish only mildly lower, though, it was another day where being in the wrong stocks hurt, headlined by Paladin Energy (PDN) down 28% while gold stocks were also on the nose. Resources are certainly a tough place to be at the moment.
The initial “Trump Bump” is probably already maturing but he hasn’t even been sworn in yet and there are still four more years to go, with Chapter 1 likely to be dominated by deregulation and tariffs. On the election trail, the President-elect described “tariffs” as his favourite word although it took time for him to roll them out in 2016. Conversely, corporate Australia is arguably heading in the opposite direction with government inquiries/commissions becoming increasingly commonplace, they may often be warranted but they’re generally bad news for stocks, especially the long drawn-out affairs that seem to be in vogue.
A soft start to the week as the ASX was dragged lower by sharp moves in commodities and energy. We were given clarity on the size and scope of the China stimulus package but there was limited (positive) surprise, leaving markets wanting more.
Market sceptics keep telling us that stock market valuations are too high and a meaningful correction is imminent, but these calls are currently falling on deaf errors. Even important pockets of the lagging ASX, like the banking sector, have repeatedly been described as too expensive and a sell by most analysts.
China’s much anticipated release of further stimulus has underwhelmed, or at least it hasn’t delivered a positive surprise. The package worth 6 trillion yuan ($US1.26 trillion) + another 4 trillion yuan in a special bond facility is designed to help China’s leveraged local governments restructure their finances. In simple, terms, the centralised Government is backstopping local Governments so they can be more pro-growth in their decisions rather than worrying about big piles of debt. The amount and structure of the vehicle was largely well known, and while we finally got a number to attach to it, it was very much aligned with what had been leaked i.e. no great positive shock.
A strong start for the ASX, buoyed by a solid run in Commodity markets overnight saw the market up over 90pts early on before tapering off somewhat as the day progressed.
The ASX200 advanced +0.3% on Thursday, in a very different session from the one enjoyed by US equities following Trump’s victory. Less than 55% of the local mainboard and 5 of the major 11 sectors closed in positive territory.
