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An intriguing session today with our first crack at digesting what a Trump Presidency could mean locally. The overwhelming takeaway being higher interest rates are a negative for property & infrastructure, a stronger $US will hinder Gold & related equities which were hit , US earners should benefit and found some love, industrial commodities were okay given a better global growth outlook partially offsetting the headwind of a stronger greenback while the “drill baby drill” beneficiaries in mining services also found support.
We are making two changes to the Active Growth Portfolio Today
The bookies again proved to be a far better gauge of politics than the polls, with Donald Trump steamrolling Kamala Harris in yesterday’s election. We all know the result: the Republicans are poised to control the House and Senate, making Trump one of the most powerful Presidents in history, a far cry from a jail cell.
US equity futures rallied, bonds yields traded materially higher (US 10’s +18bps), the $US Dollar Index up +1.4%, the AUD down the same amount & Bitcoin +8% all indicate that Trump is now a very short Favourite to win a 2nd term in office.
Melbourne Cup Day saw the RBA leave interest rates at 4.35% while indicating they will remain at their 13-year high for some time. This is not ideal for Prime Minister Albanese, as a federal election is due between February and May. Labour has already started looking for votes from the younger generation by targeting fees/payments around further education.
Each year, Macquarie’s Quant team puts out their picks for the cup, and we’ve included the key points for Market Matters Members. Thanks to Macquarie for sharing the insights, and as always, punt with your head, not over it!
The ASX200 enjoyed a solid start to the Presidential election week, closing up +0.6%. The financials dragged the index higher throughout the session, contributing ~50% to the market’s advance. Westpac (WBC) reversed an early intra-day ~2.5% loss to finish up +0.9% as investors digested its FY report.
The ASX followed US S&P500 futures and Westpac (WBC) lower in the early morning before reversing higher throughout the day.
The “Magnificent Seven” goliath tech stocks have come off the boil over recent months, illustrated by the NASDAQ failing to break above its July peak, whereas the Broad-based S&P500, Dow Jones and Russell 30 have all posted new milestones in recent weeks. The markets are becoming more discerning towards high-valuation growth stocks, demanding increasingly strong results to maintain their bullish advance.
The ASX200 struggled last week, ending its worst week in 3-months, down 1.1% on broad-based losses as the market jumped from one hurdle to another. The US election is one variable that is now just a few days away—we’re sure everybody will be glad when that particular circus has left town.
