Archives: Reports
Donald Trump will become President of the United States tomorrow morning (our time), and as we know, since his victory in November, equities have embraced his return to the Whitehouse. This has pushed valuations higher as momentum moves dominated 2024 with many major stocks trading well above their average P/E’s of recent years, with the banks receiving significant coverage in the press.
We are making two changes to the International Equities Portfolio
We are making two changes to the Active Growth Portfolio today, with one also applying to the Emerging Companies Portfolio.
Usual Market Matters reports will recommence on Monday the 20th January, however, a big move on Friday night in the U.S and a SPI Futures pricing a decline of 71 points / 0.86% this morning suggest an update is warranted. Markets begin 2025 with great expectations as anticipation of US tax cuts and pro-business deregulation, a continued economic soft landing, ongoing rate cuts in the US and the start of a cutting cycle in Australia.
A positive (shortened) session overnight on Wall Street with the Dow Jones up +390pts/0.91% while the S&P 500 and Nasdaq advanced 1.1% and 1.4% respectively in quiet US trade. All 11 sectors were higher led by Consumer Discretionary and large cap technology, Tesla (TSLA US) the standout up 7.36%
A fairly flat end to what has been a positive year for Markets, albeit with one trading day to go (27th December). The ASX 200 is up ~8%, a solid outcome, though when we compare it to US markets it’s certainly underwhelming against the S&P500 up ~25%. Having international exposure during 2024 has certainly driven better performance.
The ASX200 surged +1.7% on Monday on broad-based buying and a classic Christmas absence of selling; it’s a shame we’d previously corrected over 5% from the all-time high earlier in the month, taking the index down to a fresh 3-month low on Friday. Monday saw over 90% of the main board close higher, but the financials and mining stocks led the advance, delivering the local markets’ best day since the end of July.
The ASX recouped all on Friday’s losses and some as low volumes (Sydney CBD was a ghost town today) colluded with a more favourable read on US inflation on Friday night to propel stocks higher. Personal Consumption Expenditures (PCE), the Feds preferred measure came in softer than expected which cast a shadow on Jerome Powells turn of phrase/view on rates earlier last week.
The ASX200 was thumped 2.76% last week after the Fed side-swiped credit markets on Wednesday when, after cutting rates 0.25%, they delivered a less dovish outlook for interest rates than was expected;
• The Fed revised its outlook for rate cuts in 2025, indicating that there will be two reductions, down from the four forecasted in September – a reasonable change in just three months.
• Credit markets have already become sceptical towards the two cuts and are now pricing in a 50-50 chance that the 2nd won’t be forthcoming before next Christmas.
• Markets have been concerned that Trump’s policies will lift inflation. The Fed appears to be getting ahead of the curve, just in case.
The ASX200 ended a volatile and tough week, down 2.76% hitting a 100-day low on Friday. The Fed was the catalyst after cutting interest rates by 0.25% on Wednesday night, but at the same time, it moved the proverbial goalposts in terms of the future path in 2025. The Fed revised its outlook for rate cuts in 2025, indicating two reductions, down from the four previously forecasted in September.
