Archives: Reports
The FANG+ Index is a good gauge of the health of the aptly named “Magnificent Seven” stocks, which have lifted US indices higher over the last twenty months. The recent ~21% sharp pullback illustrates that even the most robust pockets of the market retrace when they get ahead of themselves, i.e. positions become “crowded” leaving fresh buying scarce at best. We don’t believe the advance is over, but it’s maturing, which is likely to see the weaker members start/continue to struggle.
The ASX opened firmly on the backfoot and selling intensified post a hotter than expected monthly inflation read at 11.30am, down ~60pts at the lows before a consistent/impressive grind back up to par by the close – the buy the dip mentality remains in play!
The ASX200 surrendered early gains on Tuesday to close down -0.2%, with over 60% of the main board ending the session lower. It was a rare day of weakness for the banks and strength in the resources, but as we often say, the market can’t go up without the banks. The “Big Four” slipped an average of -0.7% while Bendigo (BEN) tumbled -4.2% following their average FY24 result on Monday, i.e. after surging over +30% year-to-date, the market expected more.
A big day of reporting across Market Matters Portfolios with some hits and a few misses, particularly amongst the smaller companies. Overall, it felt like the market lost some steam after a squeeze higher in early trade. While calling tops is fraught with danger, we wouldn’t be surprised to see some consolidation from here.
Fed Chair Jerome Powell spoke at the Jackson Hole Economic Symposium on Friday night, and said all the right things, reaffirming the markets’ belief that interest rate cuts are just around the corner, but importantly, also highlighted confidence in the economy, which allayed some recent concerns about a potential recession.
Jerome Powell signaled in his speech from Jackson Hole that interest rate cuts lay ahead, although he didn’t provide any details on when or how big the moves would be. The US credit markets are still pricing in 8 rate cuts by this time next year, with the FED Chair’s much-anticipated speech having little impact on expectations for the path of rate cuts into/through 2025. It’s a shame things aren’t as clear-cut for Michele Bullock and the RBA.
The first fall in 11 trading days for the ASX, though it was only marginal on a day that saw far fewer companies report results, and certainly less influential names from an index perspective.
Yesterday, Whitehaven Coal (WHC) announced that Nippon Steel and JFE Steel had bought 30% of their recently acquired Blackwater Met Coal Mine for $US1.1bn, a very useful and well-received cash injection. Interestingly, Japanese giant Nippon Steel said the Queensland government’s coal royalties grab influenced its decision to spend over $US1 billion buying the stake amid rising concerns over supply security, although such concerns haven’t yet been reflected in the coal price, which is trading at 2-year lows. They are understandably concerned that the QLD government’s royalty hike and increasing headwinds around funding will discourage future investments. Politicians and financers are playing an important role in the future evolution of our coal industry, not necessarily a healthy mix
