Archives: Reports

Reporting season is keeping MM busy, while the “buy the dip” mentality continues on the index level. Wednesday saw the ASX200 deliver its 9th consecutive positive session, its longest winning streak in almost a decade. The market reversed early losses to be up +0.16%, closing back above the psychological 8,000 level, with further gains likely today. A recovery in the heavyweight miners was the main driving force outside of reporting season, e.g. Mineral Resources (MIN) +5.2%, Fortescue (FMG) +4.1%, and BHP Group (BHP) +1.6%. The iron ore names aren’t out of the woods yet, but the recent news flow has undoubtedly been negative enough to deliver their nadir.

Equities took a rest overnight following their stellar recovery; the UK FTSE -1% was the underperformer in Europe compared to the EURO STOXX 50 -0.3%. The US S&P500 slipped just -0.2%, snapping its 8-day winning streak in a very quiet fashion. A period of consolidation into Friday’s Jackson Hole Economic Symposium is likely as the market waits on Jerome Powell’s speech, which is likely to provide a deep insight into the Fed’s current outlook for interest rates. A cut in September is almost a certainty, though comments about future cuts is what will drive markets.

The ASX200 trod water on Monday, although there were ongoing clear signs of “buying into weakness” with the main index reversing losses to extend its recent recovery – the Australian market is only 2% below its all-time high, having quickly dismissed the recent market jitters courtesy of the Yen Carry Trade unwind and a potential US recession. As we often trot out at MM, the market doesn’t go down without the banks. Following Westpac’s solid Q3 update, we saw CBA again post fresh all-time highs and WBC fresh post-COVID highs with the “Big Four” up an average of +1.25% – the Banking Sector looks good, which by definition suggests the ASX200 will be testing its all-time high over the coming weeks.

The index ended last week on the front foot, an impressive +4.5% above the month’s low, although we haven’t embraced the bounce as enthusiastically as the US, where the S&P500 is now only 2% below its all-time high—what a difference a week makes! At this stage, markets are more comfortable that rate cuts may be delayed than a recession is in the offing. So far this month, the ASX200 is down only -1.5 %, with the Energy & Materials stocks continuing to weigh on the ASX. However, outside of China issues, valuations remain stretched, likely leading to elevated volatility whenever the sentiment vaguely sours.