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US stocks ended last week on the back foot, with the broad-based S&P500 down -2.1 % over the 5-days while the NASDAQ fared worse, falling -3.4%. Trump’s landslide victory initially propelled US stocks higher as deregulation and lower corporate taxes set the bulls charging.
Overseas indices ended the week poorly, with the post-election rally losing steam. The Dow ended over 300-points, while the NASDAQ led the decline, down 2.4%. European equities fared better, with the EURO STOXX 50 slipping 0.8 while the FTSE closed down just 0.1%. Declines in pharmaceutical stocks weighed on the Dow and the S&P 500, after Trump said he planned to nominate vaccine sceptic Robert F. Kennedy Jr. to lead the U.S. Department of Health and Human Services.
10/11 sectors made gains today with 70% of the main board closing higher, though once again, we’re seeing a narrow band of winners that are driving the index with the ASX200 now only 100pts below its all-time high.
The ASX200 snapped its three-day losing streak on Thursday, helped by increased bets on a Fed rate cut in December following the inline US inflation print. Locally, Australia’s unemployment rate was unchanged at 4.1% in October, which was also in line with expectations and had little impact on domestic bonds or the $A.
Another mixed but ultimately positive session for the ASX, with IT, Financials & Consumer Discretionary leading the way thanks to new all-time highs for Xero (XRO) $172.94, Comm Bank (CBA) $152.84 & JB Hi-Fi (JBH) $88.37 as valuations get stretched ever higher, while the resources remain holed up in the naughty corner.
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.
