Archives: Reports
We are making a number of changes to the Emerging Companies Portfolio.
The potential ~$64bn takeover of Anglo-American (AAL LN) by BHP has dominated the news in recent weeks, but the clock is ticking, at 5pm London time tonight, the door will close, for now at least. It will come as no great surprise if BHP walks as Anglo’s CEO Duncan Wanblad and the rest of the AAL board appeared to have no interest in discussing a bid – at least at the current price point BHP’s offer was implying. However, there is still a chance that BHP could lob in a “best a final” conservative bid aimed at disgruntled shareholders before the window closes, making BHP a tricky proposition at current levels.
A lacklustre session at the index level today, although a few bits of corporate news created some interest, mostly on the downside with slightly softer guidance a common trait.
We are taking profit on an international holding
Gold made new all-time highs this week as precious metals continued their advance even when fund managers, according to the recent Bank of America Fund Managers Survey, believe they are the most overvalued since 2020. The recent move was aided by a pullback in bond yields on renewed optimism towards rate cuts and the subsequent weakness in the $US. We are a little torn towards what comes next for gold and its related stocks, although if we were traders, it would be “long or square”, most definitely not short.
Another strong session for the ASX underpinned by good buying amongst the Energy, Materials & IT sectors that all rallied more than 1%. China has pulled more stimulus levers over the last few days, and although they are targeted, as was previously flagged by Beijing, it does feel like Xi Jinping has drawn a line in the sand. That, coupled with the prospect of lower interest rates/bond yields, equities are running, and for now, we’ll enjoy the upside.
China has pulled more stimulus levers over the last few days, and although they are targeted, as was previously flagged by Beijing, it does feel like Xi Jinping has drawn a line in the sand after recent economic data signalled the need for urgent action. The property sector, once an integral driver of economic growth, is still struggling with prices for new homes across 70 cities having declined for the last ten consecutive months after falling 0.6% in April, with property investment down a whopping -9.8% in the 1st four months of 2024 compared to last year. April’s fall represents the fastest month-on-month rate of decline in more than nine years, although interestingly, real estate stocks are starting to bounce.
The ASX200 enjoyed another solid week, finishing up +0.8% after retesting its all-time high on Thursday following market-friendly US inflation data on Wednesday night AEST. This week was a huge win for the Doves, with major economic data in both the US and Australia pointing towards an economic slowdown and inflation that might not be as sticky as many feared throughout April
The ASX pulled back from recent highs today on some profit-taking after a solid week. Better news on the inflation and interest rate front propelled equities to all-time highs in the US & UK, and a whisker below all-time highs locally, as the narrative around a soft landing, or no landing at all, continues to gain traction. Interest rate sensitive sectors have had a great week, and fading the moves that played out in April has certainly been the trade to back, while it looks like BHO may walk away from a deal to buy Anglo at this point, underpinning a relief rally in our biggest local index weight. All in all, investors made money this week, we’ll take it, and as always, concentrate on what could come next! Manly vs Broncos tonight – Go the Mighty Sea Eagles!
Recent years have witnessed some huge moves in cyclical commodities such as coal, lithium, and copper. Uranium is another one that can be added to the list, although it’s a touch less tangible in Australia. We obviously cannot touch the stuff, and there is no nuclear power on our shores. US President Joe Biden has just signed the bill to ban the import of Russian-sourced enriched uranium into the US. We remain very bullish on the outlook for uranium in the next few years, seeing no hurdles to the upside, although Donald Trump may reverse this particular bill if he wins in November’s US election. We could easily see uranium another 50% higher in the coming years.
