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The ASX200 market showed impressive resilience last week, rallying over 2%, inching ever closer to a new all-time high. The 8,000 milestone is now less than 2% away, a repeat performance, and we’re there. The strength should have encouraged the bulls, especially considering the market’s ability to close on its highs for the week ahead of the US Jobs Report. However, the market continues to deliver very mixed results on the stock and sector level, with the resources likely to take their turn in the “naughty corner” at the start of next week after copper and gold tumbled on Friday night. NB: The ASX is closed Monday.
A long weekend and some important data in the US tonight could have prompted caution today, however, that wasn’t the case with the ASX rallying into the close, finishing on its highs, and booking a 2% gain for the week – not a bad effort at all!
The FANG acronym has lost its popularity through 2024 as the “Magnificent Seven” and “Super Six” are more eye-catching and useful for clicks in today’s digital world. However, this index has continued to power to fresh all-time highs along with the NASDAQ, and while under the hood, not all stocks will move as one, the upside momentum of the index remains impressive.
Broad-based buying across the ASX today with all sectors up on the session. The impressive run in financials continued – banks all well supported, while Tech followed their overseas counterparts higher. When the ASX peaked in May at 7900, Aussie 3-year bond yields were at 3.84% before running up to 4.1% as expectations changed around interest rates, prompting a ~3% correction in equities. 3’s are now at 3.91% and equities have bounced.
We are adding a new position to the Growth Portfolio & two new positions to the International Portfolio
The US Tech Sector surged to fresh all-time highs overnight, led by a 5.2% surge by Nvidia (NVDA US), the shining light. At the close, the $US3 trillion dollar AI behemoth had a larger market cap than Apple Inc (AAPL US), illustrating perfectly how things change in this rapidly evolving sector. The so-called “Magnificent Seven” should really be the “Super Six”, with Tesla (TSLA US) down 30% year-to-date, having themselves evolved and performed very differently over the last year, hence our consideration of where MM should be invested across the influential space.
A solid session for stocks that recouped yesterday’s decline, although there was significant divergence from a sector and stock perspective, with commodities on the nose while the more defensive Telcos, Healthcare & Staples attracted buying.
Weakness across European indices has started to weigh on global markets ahead of this week’s European Central Bank (ECB) interest rate decision. The ECB is expected to cut interest rates by 25 basis points this Thursday, reducing the main refinancing rate to 4.25%, the marginal lending rate to 4.50%, and the deposit rate to 3.75%. This will be the first cut in many years although Lagarde may have started to wish she hadn’t been so clear with her messaging for a cut in June. The question being asked is what comes next after this historic pivot.
After a reasonable open, the ASX lost its way in a quiet session tracking a similar trend in the US overnight as we await more data around US employment later in the week. Not a lot to latch onto today, other than weakness in Oil thanks to OPEC+, a rise in Gold on $US weakness and a mixed bag from a sector perspective locally.
Solar stocks have roared back into favour this year as the world searches for carbon-neutral energy alternatives. Overnight, we saw Goldman Sachs raise its price target for First Solar (FSLR US), a stock we’ve held since mid-2023. The US powerhouse cited tailwinds from tariffs and data centre demand looming on the horizon, providing further room for the stock to run even after its 80% surge over the past two months – “We remain bullish on the outlook for FSLR and believe several tailwinds could support higher [average selling prices] or potential capacity expansion.”
