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Not a lot to hang ones hat on today, the index trading around in a tight range before ultimately ending flat ahead of the US Federal Reserve’s decision on interest rates tonight. They’re going to cut, the only question is by how much with traders erring on the side of a bigger 0.5% reduction to kick off an easing cycle that markets think will last until the end of 2025
The Active Growth Portfolio advanced 2.9% last week, including dividends, outperforming the ASX200, which gained 2.3%. We enjoyed solid gains by Mineral Resources (MIN) +24.9%, Evolution Mining (EVN) +14%, South32 (S32) +8%, Magellan (MFG) +7.6% and BHP Group (BHP) +6.4% while Worley (WOR) -2.3%, Treasury Wines (TWE) -2%, and CSL Ltd (CSL) -1.8% reined in the outperformance.
The ASX jumped out of the blocks this morning and made a new all-time high at 8148.8, though it was the magnitude of a beez……foot, just 1/10th of 1 pt above the previous all-time, intra-day high set on the 1st August at 8148.7. Stocks ultimately drifted lower through the session with some interesting corporate news flow hitting the tape, but little that turned the dial at the index level
Many subscribers may be surprised to learn that gold outperformed US stocks in 2024. In US dollars, year-to-date, gold has surged +25% while the S&P500 is up +18%—not too shabby by either! The prospect of declining interest rates has been a major driving force for both markets, with gold also enjoying strong buying out of China as the Yuan and property prices fell. However, markets never go up in straight lines forever, and we are conscious that “a rest” could be constructive for gold moving into 2025, i.e. similar to the pullback in mid-2023.
A lacklustre start to a week dominated by central bank calls on interest rates, headlined by the US Fed on Thursday night as weakness in China continues; data over the weekend showing China’s new home prices fell at their fastest pace in more than nine years in August, putting pressure back on the mining stocks today.
Official data released on Saturday showed that China’s new home prices fell at their fastest pace in more than nine years in August, with economic stimulus failing to deliver a meaningful recovery in the country’s property sector. New home prices fell 5.3% YoY, the fastest pace since May 2015, compared with a 4.9% slide in July. In monthly terms, new home prices fell for the 14th straight month, down 0.7%, matching a dip in July. Much to Beijing’s chagrin, China’s property market continues to struggle with heavily indebted developers, unfinished apartments, and declining buyer confidence, weighing on the overall financial system and endangering the year’s 5% economic growth target.
The ASX200 advanced +1.5% last week (inclusive of dividends) as the Materials Sector bounced back with a bang, while the high-flying financials were the only meaningful drag on the index. The out-of-favour commodities took it in turns to squeeze the shorts last week, with the lithium stocks soaring on Wednesday, passing the baton to uranium on Thursday, followed by coal and gold on Friday, ultimately delivering an impressive +6.2% gain for the Materials Sector over the week
A solid end to a good week for Australian shares, the ASX200 up 1.5% inclusive of dividends, with the Material sector driving the gains – the first time for a while – with the financials the only sector to lose ground.
Many investors expected the US Presidential debate to be the focus this week, but Vladamir Putin stole the thunder from Harris and Trump. The Russian President is considering restrictions on uranium, titanium, and nickel exports – he is playing a tough “game of chicken” because Russia needs the money but is keen to limit sanctions by the West due to the war with Ukraine.
A solid session today with broad-based buying and importantly, both index heavyweights (Banks & Miners) made strong headway. The bid is coming back into the resources and if banks can just hold it together, the index should finally breakout to be highs, now less than 100pts away.
