The ASX200 along with most global indices has taken a dive this month, its amazing how fundamentals have a habit of delivering events which coincide with the dominant seasonal trends i.e. September is regarded by many as the worst month to invest in equities. The fascinating impact of human psychology as it swings between “Fear & Greed” is evident when a market falls as expected only for investors to then find themselves questioning their fortitude to stand up and buy when things feel bad – an action which is usually but not always the correct course...
The penultimate day of the trading week saw local stocks stage a strong recovery and we commence today’s session with the index down less than 0.5% for the week, what Chinese property panic! The market enjoyed broad based buying yesterday with over 80% of stocks rallying led by the Energy and IT names although impressively all 11 sectors managed to post gains. The re-opening / economic recovery trade came back into focus as NSW’s vaccination rate continues to increase above all but the most optimistic expectations, at the current pace 90% of the eligible population...
Wednesday saw the ASX200 rally strongly from early sharp losses after the PBOC (China’s central bank) injected more Yuan than anticipated into its banking system coupled with embattled property group Evergrande announcing it would make an interest payment today – the latter is a small step along a long journey but the action out of Beijing implies the communist party intends to “manage” the situation. The market reaction wasn’t so much one of huge “risk on” as opposed to a strong bounce / sigh of relief after a tough period with the recovery most noticeable in the large cap iron ore names:
The ASX200 staged a strong recovery yesterday after initially taking Septembers sell-off to 343-points / 4.6%, coincidentally testing our 7200 target area in the process. Ultimately Tuesday was a frustrating session for MM as we sat poised to increase risk into the pullback but our targeted purchases all fell short of our ideal levels discussed in recent reports. We must always remember that investing is rarely a perfect science and our main focus running into October will be more around whether MM pays up...
The ASX200 was hit hard on Monday falling by more than 2% on very broad based selling. The only pocket of strength coming from the utilities sector which benefited from yet more corporate activity from cashed up foreign investors, this time Canada’s Brookfield took aim at AusNet Services (AST) which is involved in electricity & gas distribution in Victoria elevating the stock by ~20%. There is certainly cash around for critical infrastructure assets that can lock in long term funding at attractive rates.
The ASX200 only slipped 3 meagre points last week but if you were overweight the iron ore sector it would have felt very different as Beijing’s ongoing clampdown on steel production, courtesy of their migration towards lower emissions, drove the price of the bulk commodity lower. Come Friday afternoon iron ore had more than halved in just 1-month hammering the likes of Fortescue Metals (FMG), RIO Tinto (RIO) and BHP Group (BHP) in the process. We have a few takeout’s from this seismic repricing over recent weeks:
The ASX200 rallied strongly yesterday as it enjoyed broad-based buying, by 4pm 60% of the index had closed in positive territory with the Energy Sector again best on ground following the strong rally by crude oil. Outside of iron ore names which have seen the likes of Fortescue Metals Group tumble 35% in just 8-weeks, although it did pay a major dividend on route, the broad market has been devoid of any meaningful selling as we continue to hover within a few percent of its all-time high.
The ASX200 slipped 20-points lower on Wednesday primarily because the index is more heavily weighted towards the value, as opposed to growth stocks i.e. banks and resources. Fortunately a strong performance from the Healthcare & IT stocks stemmed the losses as the market continued to embrace Tuesday’s dovish comments from the RBA. To put things into perspective the Healthcare & IT stocks make up by less than 16% of the ASX200 compared to 41% for the US S&P500 i.e. the growth names exert far less influence on the Australian index.
The ASX200 again recovered from early losses yesterday to close up 12-points with a 4.5% advance by the Energy Sector the clear standout, coincidentally the day after MM described it as “the cheap pocket of the market” – we remain overweight and bullish oil stocks which have fallen in 2021, even while crude oil has rallied almost 50%. The miners played a supporting role which caught our attention as iron ore plumbed multi-month lows, on balance the reflation trade is slowly gathering momentum.
The ASX200 enjoyed another classic 2021 day to kick off the week, it may not have managed to close on its highs but the local index still recovered from early weakness to close up 0.25%. The number of winners and losers was pretty evenly matched but the aggressive buying which rolled through much of the Resources Sector was more than enough to offset loses elsewhere e.g. OZ Minerals (OZL) +4.2% and Pilbara Minerals (PLS) +7.3%. MM remains both bullish and overweight the Resources Sector but following our purchase of Alumina (AWC) yesterday it’s probably now time to sit back...
The penultimate day of the trading week saw local stocks stage a strong recovery and we commence today’s session with the index down less than 0.5% for the week, what Chinese property panic! The market enjoyed broad based buying yesterday with over 80% of stocks rallying led by the Energy and IT names although impressively all 11 sectors managed to post gains. The re-opening / economic recovery trade came back into focus as NSW’s vaccination rate continues to increase above all but the most optimistic expectations, at the current pace 90% of the eligible population...
Wednesday saw the ASX200 rally strongly from early sharp losses after the PBOC (China’s central bank) injected more Yuan than anticipated into its banking system coupled with embattled property group Evergrande announcing it would make an interest payment today – the latter is a small step along a long journey but the action out of Beijing implies the communist party intends to “manage” the situation. The market reaction wasn’t so much one of huge “risk on” as opposed to a strong bounce / sigh of relief after a tough period with the recovery most noticeable in the large cap iron ore names:
The ASX200 staged a strong recovery yesterday after initially taking Septembers sell-off to 343-points / 4.6%, coincidentally testing our 7200 target area in the process. Ultimately Tuesday was a frustrating session for MM as we sat poised to increase risk into the pullback but our targeted purchases all fell short of our ideal levels discussed in recent reports. We must always remember that investing is rarely a perfect science and our main focus running into October will be more around whether MM pays up...
The ASX200 was hit hard on Monday falling by more than 2% on very broad based selling. The only pocket of strength coming from the utilities sector which benefited from yet more corporate activity from cashed up foreign investors, this time Canada’s Brookfield took aim at AusNet Services (AST) which is involved in electricity & gas distribution in Victoria elevating the stock by ~20%. There is certainly cash around for critical infrastructure assets that can lock in long term funding at attractive rates.
The ASX200 only slipped 3 meagre points last week but if you were overweight the iron ore sector it would have felt very different as Beijing’s ongoing clampdown on steel production, courtesy of their migration towards lower emissions, drove the price of the bulk commodity lower. Come Friday afternoon iron ore had more than halved in just 1-month hammering the likes of Fortescue Metals (FMG), RIO Tinto (RIO) and BHP Group (BHP) in the process. We have a few takeout’s from this seismic repricing over recent weeks:
The ASX200 rallied strongly yesterday as it enjoyed broad-based buying, by 4pm 60% of the index had closed in positive territory with the Energy Sector again best on ground following the strong rally by crude oil. Outside of iron ore names which have seen the likes of Fortescue Metals Group tumble 35% in just 8-weeks, although it did pay a major dividend on route, the broad market has been devoid of any meaningful selling as we continue to hover within a few percent of its all-time high.
The ASX200 slipped 20-points lower on Wednesday primarily because the index is more heavily weighted towards the value, as opposed to growth stocks i.e. banks and resources. Fortunately a strong performance from the Healthcare & IT stocks stemmed the losses as the market continued to embrace Tuesday’s dovish comments from the RBA. To put things into perspective the Healthcare & IT stocks make up by less than 16% of the ASX200 compared to 41% for the US S&P500 i.e. the growth names exert far less influence on the Australian index.
The ASX200 again recovered from early losses yesterday to close up 12-points with a 4.5% advance by the Energy Sector the clear standout, coincidentally the day after MM described it as “the cheap pocket of the market” – we remain overweight and bullish oil stocks which have fallen in 2021, even while crude oil has rallied almost 50%. The miners played a supporting role which caught our attention as iron ore plumbed multi-month lows, on balance the reflation trade is slowly gathering momentum.
The ASX200 enjoyed another classic 2021 day to kick off the week, it may not have managed to close on its highs but the local index still recovered from early weakness to close up 0.25%. The number of winners and losers was pretty evenly matched but the aggressive buying which rolled through much of the Resources Sector was more than enough to offset loses elsewhere e.g. OZ Minerals (OZL) +4.2% and Pilbara Minerals (PLS) +7.3%. MM remains both bullish and overweight the Resources Sector but following our purchase of Alumina (AWC) yesterday it’s probably now time to sit back...
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