Archives: Reports
We are making two changes to the Growth Portfolio today.
The ASX 200 struggled on Monday despite the bullish offshore leads from Wall Street – again, the Australian market remains more correlated to European bourses than the more widely discussed US peers. However, the local market managed to recover from early-morning weakness to end the first session of June marginally lower, as the miners again countered the ongoing weakness in the banking sector, primarily due to a 1% dip in Commonwealth Bank (ASX: CBA). With BHP Group (ASX: BHP) posting new all-time highs yesterday lunchtime and the “Big Four Banks” weighed down by concerns around the housing market post the budget, and high valuations compared to their international peers, we see no reason to fade the outperformance by the miners versus the banks:
The ASX opened lower and chopped around for most of the day until a sustained upward move in the afternoon pulled the index back to close near flat. Belief in a potential US-Iran ceasefire continued to be hold firm despite a rebound in oil prices, though there was plenty of action under the surface. Technology was the standout sector, with local software stocks tracking the positive move in the U.S on Friday night, while Banks and Healthcare names dragged.
Over the past fortnight, the ASX has enjoyed some much-needed support from a welcome shift in the interest-rate outlook, with softer-than-expected employment and inflation data easing concerns that the RBA may need to tighten policy further.
The ASX200 ended the week surging +1.6% higher on Friday, turning around the market’s fortunes to end the week up +0.9%, and up +0.5% for May – a clear demonstration that investors need to look through the volatile noise emanating from the US-Iran War. It was another week of sharp daily swings as markets rode the emotional roller-coaster of the conflict. However, sentiment improved into Friday after reports emerged that the US and Iran had agreed to a tentative 60-day ceasefire extension to allow further negotiations over Tehran’s nuclear program, raising hopes the three-month conflict may finally be moving towards de-escalation.
The ASX 200 bounced back strongly today, recovering almost all of yesterday’s losses as reports of a tentative 60-day ceasefire extension between the US and Iran sparked a broad risk-on rally. Falling oil prices, easing inflation concerns and lower bond yields fuelled buying across the market, with Materials, Technology and Real Estate leading gains while Energy lagged as crude slipped to five-week lows.
The ASX200 was clobbered 1.4% on Thursday as the US struck Iranian military targets for the second time this week and Kuwait said it responded to missile and drone threats, highlighting the fragility of the “so-called” ceasefire. Crude oil popped ~3% on the news, sending Asian indices and US futures sharply lower, with no clear end in sight to the geopolitical uncertainty. Global equities, not so much the ASX, may want to rally, but with roughly 20% of global oil and LNG supply effectively constrained by disruptions through the Strait of Hormuz, the market will need to see the waterway reopen soon, or the confidence currently underpinning risk assets may begin to fade quickly.
A tough session for the ASX today following fresh escalation in the Middle East. The local market turned sharply lower after Iran claimed it had targeted a US military base following American airstrikes near Bandar Abbas, reigniting fears around oil supply disruptions with U.S President Donald Trump objecting to Iran’s claim to the Strait of Hormuz and asserting no one nation should control the vital waterway – a key sticking point in resolving the crisis.
The ASX 200 roared back to life on Wednesday, reversing early weakness to close up 0.7%, with aggressive late-session buying sweeping through the market and reigniting risk appetite. Over 70% of the main board closed higher, but it was the rate-sensitive stocks that started to move after the April inflation numbers came in slightly better than expected – Consumer Discretionary (+1.8%), Tech (+1.8%), Utilities (+1.7%), and Real Estate (+1.6%) were the top four sectors on the day.
The ASX traded in two very different halves today, opening weaker as Financials extended yesterday’s selling pressure before a softer-than-expected CPI print sparked a broad rebound across the market. Once the inflation data hit, rate-sensitive sectors quickly caught a bid as traders pared back expectations of another near-term RBA hike, helping the index finish strongly into the close.
