Archives: Reports

The hot CPI print on Wednesday caught the market’s napping. Expectations were for 3.8% Year-on-Year (YoY), but unfortunately, it came in at 4.0%. The ramifications for most Australians and equities were clearly on display after the 11.30am data. While the monthly numbers don’t include all components and the RBA gives more weight to the quarterly print, the increase from April’s 3.6% suggests inflation is frustratingly still “sticky” after three consecutive months of upward pressure; concerns are growing that a 14th rate hike by the RBA is nigh.

The ASX200 feels poised to breakout on the upside and if were to add a technical caveat to this “Gut Feel” it would simply be while the index can hold above 7780, i.e. from a trading perspective that’s only a 0.7% lower. However at MM we are Active Investors, not traders, hence short term noise is interesting at times but it doesn’t influence our outlook or subsequent positioning. We have noticed, with some frustration, the markets delivered a noticeable degree of performance reversion on the stock level over the last 4-6 weeks, i.e. our Active Growth Portfolio has surrendered some its outperformance. Hence one factor we are monitoring closely is whether 2024 will become a year of two halves from a performance perspective.

The ASX200 started the week in disappointing fashion closing down 0.8% with over 60% of the main board finishing in negative territory. The performance looked even worse on the sector level with 10 of the 11 sectors closing lower, led by the Energy, Healthcare and Consumer Discretionary, which all fell over 1%. The market accelerated lower as US futures turned down into lunchtime AEST while importantly there was one-way traffic on the company news front, and it was all negative

It has traditionally been very hard to track the lithium (Li) price closely as sales are conducted via contracts and rely on a benchmarking service to provide a reference price, however, the industry is edging towards more transparent auctions as the likes of Pilbara (PLS) and more recently Albemarle Corp (ALB US) plan to sell more product using an this clearer approach. Perhaps they should be careful what they wish for as Li tests new multi-year lows! Australia’s 6th largest export has plunged over 80% in price since late 2022 causing havoc amongst the producers as the market has gone from fears of shortages to a glut in inventories. This year alone has witnessed some dramatic underperformance from Li related names which has weighed on the broader Resources Sector.