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The local Financials index looks great at first glance, but it contains the “Big Four” banks, which have been charging ahead since late 2023. When we look under the hood of the diversified financials, it’s been a mixed year for the sector, which was exemplified by the 11% drop by Challenger (CGF) yesterday following Apollo’s $530mn sell-down. In general, traditional fund managers have struggled while insurers and more new-age stocks have rallied. This morning, we’ve looked at three of our top picks as we consider what/where to increase exposure to the space into a period of market weakness.
A reasonable session today, after an aggressive sell-off yesterday swept through the ASX, and while IT topped the boards, Real-Estate stocks caught our eye with brokers starting to turn more positive on the sector, arguably a bit late, but we agree with the view
The ASX200 was hammered yesterday, losing over 150-points and retracing over 30% of August’s recovery in one fell swoop – a classic case of up by the stairs and down by the elevator. Losses were broad-based, with all 11 sectors and over 90% of stocks closing lower, a bad day at the office being an understatement. The influential banks and resources followed the negative lead from the US, with all eyes now turning to Friday’s US Jobs report; if it comes in poor, we may be in store for a repeat of early August as recession fears mount. US credit markets are already pricing in one 0.25% rate cut this month (with the possibility of 0.5% in play) and a full 1% by Christmas.
A tough day for Aussie stocks, resources and energy companies in particular as global growth fears resurfaced overnight on the back of a softer-than-expected manufacturing read in the US. Worth bearing in mind that markets had pushed up hard into the end of August so some unwind of the month-end window dressing no doubt played a part, however, with 91% of ASX 200 stocks finishing in the red, there were not many places to hide.
Overnight equities endured a tough session. The EURO STOXX 50, which led European bourses, fell 1.2%, reversing early small gains as US weakness weighed on sentiment. The tech-based NASDAQ tumbled over 3%, dragging the S&P500 down 2.1%, with Nvidia’s sharp ~10% drop setting the stage for an already jumpy market capable of swinging dramatically on any unfavourable economic data. This morning, our first thought was whether September would start in a volatile fashion similar to August, it feels like another wave of recession fears is just one major piece of economic data away with non-farm payrolls due on Friday a very important read.
Another session that looked calm on the surface, though under the hood there was a lot playing out, resources weighed as selling targeted Lithium, Iron Ore & Uranium stocks, while Woolies & Coles traded ex-dividend weighing on the Staples – the ASX 200 finished just 11 points below its all-time closing high.
The story remains the same as we kick off September, with the ASX200 falling early in the session before clawing back all of the losses to end the session higher, with the banks again performing the heavy lifting – the “Big Four” advanced an average of +1.2% after all four traded lower in the first hour. Less than 55% of the main board closed higher, but the influential big-4 were enough to offset another tough session for the embattled miners as China’s economy continues to struggle.
A more bullish session than many thought would transpire today (MM included) ahead of a public holiday in the US tonight, with the banks underpinning the majority of the advance, CBA hitting a new all-time closing high ($141.77) even though it’s trading ex-dividend.
MM is making 2 changes in the Active Growth Portfolio today
We often trot out the saying, “There are lies damned lies and statistics.” but at MM, we still believe investors should be aware of the seasonal statistics, even if we decide to ignore them. As late scientist Dr. Carl Sagan said, “You have to know the past to understand the present.” An amazing August is in the rearview mirror, which incredibly, ended unchanged after plunging over 500 points in just a few days before recovering all the losses. Now, It is time to consider September and the run into Christmas:
