The first quarter of 2021 is behind us and after 3 extremely choppy months on the stock & sector level the ASX200 itself has managed to advance 3%, or an average of just 1% per month. The determining factor of sector performance year to date has been the sharp appreciation by longer dated bond yields as markets factor in a major post COVID economic recovery.
The ASX200 has totally ignored some strong leads from global indices this week, on Monday morning a test of 6900 appeared imminent but the combination of Brisbane’s lockdown and fears around JobKeeper ending today has sent the local index down closer to 6700 come Tuesdays final bell. – as can be seen on the chart below we’re back at the mid-point of 2021, yet again. The selling yesterday was noticeably broad based with almost 85% of the ASX200 closing in the red, notably the Telco’s were the only sector which managed to close in positive territory as Telstra (TLS) continued to firm.
Yesterday morning we saw Brisbane go into a snap 3-day lock down as fears the UK strain of COVID was about to explode through the capital of the Sunshine State, undoubtedly plenty of Easter holidays have been thrown into disarray by this one press conference.
The rally by building stocks caught my attention yesterday in what was another fairly lacklustre session. The 4 local building stocks we are looking at today reside in the large Materials Sector which is illustrated below. At MM we had reduced our exposure to the influential Resources Sector.
The ASX200 enjoyed a surprisingly strong Wednesday ignoring weakness in both the US and Asian Indices, although only just over half of the stocks rallied from an index perspective strength was at the right end of town with both Commonwealth Bank (CBA) and CSL Ltd (CSL) up by almost 2%. Weakness was again focused in the recovery and European facing stocks as the COVID situation deteriorates in many parts of the world, whenever I type words like this I think how lucky we’ve been in Australia.
The ASX200 again challenged the 6800 area early on yesterday only to spend the afternoon drifting lower on broad based selling, the tourism stocks garnered some especially harsh treatment e.g. Flight Centre (FLT), Corporate Travel (CTD) and Webjet (WEB) fell by an average of -3.8%. The market remains choppy and non-committed in both directions making it easy to adopt both a bullish & bearish outlook over 24-hours, overall we feel its best to adopt the attitude of “if in doubt do nowt”.
The ASX200 kicked off the week in good form closing up +0.7% as 65% of the index rallied and all sectors advanced except the resources which fell as iron ore tumbled over 7% at its worst. The greater their leverage to the bulk commodity the harder they fell from RIO Tinto (RIO) -1.2% to Fortescue (FMG) -4.3% and Champion Iron (CIA) -10.1% at the extreme, as the sector falls out of favour we are slowly becoming more interested but we’re in no hurry, just yet.
The ASX200 struggled last week even while US indices scaled fresh all-time highs, Europe posted new COVID highs and Asia was stable. The -0.9% fall locally was largely caused by the value end of town as Banks & Resources surrendered some of their recent gains with the likes of BHP Group (BHP) and RIO Tinto (RIO) both falling over 6%, however the interesting side of the coin is bond yields continued to rally posing the question - “are value stocks pre-empting a pullback / period of consolidation in bond yields?”. Subscribers know our view on this subject hence today I’ve looked at a few different pockets of interest to keep our finger on the financial markets pulse.
The ASX200 is starting to feel very tired as it continually discounts apparent good news while embracing anything that feels vaguely off point. Local stocks are up only +2.4% year to-date compared to the S&P500 at +5.8% and it’s been weighed down by the heavyweight tech sector which has struggled as bond yields have rallied higher (both basis yesterday afternoon). The selling which drove stocks down yesterday was broad based and fairly unrelenting although not aggressive and outside of the Gold Sector there weren’t many bright areas – it felt to me like stocks were trying to 2nd guess how US stocks would digest the Feds rhetoric after a good night’s sleep, they were clearly nervous which has proved well founded given the Nasdaq’s ~3% decline.
The ASX200 has totally ignored some strong leads from global indices this week, on Monday morning a test of 6900 appeared imminent but the combination of Brisbane’s lockdown and fears around JobKeeper ending today has sent the local index down closer to 6700 come Tuesdays final bell. – as can be seen on the chart below we’re back at the mid-point of 2021, yet again. The selling yesterday was noticeably broad based with almost 85% of the ASX200 closing in the red, notably the Telco’s were the only sector which managed to close in positive territory as Telstra (TLS) continued to firm.
Yesterday morning we saw Brisbane go into a snap 3-day lock down as fears the UK strain of COVID was about to explode through the capital of the Sunshine State, undoubtedly plenty of Easter holidays have been thrown into disarray by this one press conference.
The rally by building stocks caught my attention yesterday in what was another fairly lacklustre session. The 4 local building stocks we are looking at today reside in the large Materials Sector which is illustrated below. At MM we had reduced our exposure to the influential Resources Sector.
The ASX200 enjoyed a surprisingly strong Wednesday ignoring weakness in both the US and Asian Indices, although only just over half of the stocks rallied from an index perspective strength was at the right end of town with both Commonwealth Bank (CBA) and CSL Ltd (CSL) up by almost 2%. Weakness was again focused in the recovery and European facing stocks as the COVID situation deteriorates in many parts of the world, whenever I type words like this I think how lucky we’ve been in Australia.
The ASX200 again challenged the 6800 area early on yesterday only to spend the afternoon drifting lower on broad based selling, the tourism stocks garnered some especially harsh treatment e.g. Flight Centre (FLT), Corporate Travel (CTD) and Webjet (WEB) fell by an average of -3.8%. The market remains choppy and non-committed in both directions making it easy to adopt both a bullish & bearish outlook over 24-hours, overall we feel its best to adopt the attitude of “if in doubt do nowt”.
The ASX200 kicked off the week in good form closing up +0.7% as 65% of the index rallied and all sectors advanced except the resources which fell as iron ore tumbled over 7% at its worst. The greater their leverage to the bulk commodity the harder they fell from RIO Tinto (RIO) -1.2% to Fortescue (FMG) -4.3% and Champion Iron (CIA) -10.1% at the extreme, as the sector falls out of favour we are slowly becoming more interested but we’re in no hurry, just yet.
The ASX200 struggled last week even while US indices scaled fresh all-time highs, Europe posted new COVID highs and Asia was stable. The -0.9% fall locally was largely caused by the value end of town as Banks & Resources surrendered some of their recent gains with the likes of BHP Group (BHP) and RIO Tinto (RIO) both falling over 6%, however the interesting side of the coin is bond yields continued to rally posing the question - “are value stocks pre-empting a pullback / period of consolidation in bond yields?”. Subscribers know our view on this subject hence today I’ve looked at a few different pockets of interest to keep our finger on the financial markets pulse.
The ASX200 is starting to feel very tired as it continually discounts apparent good news while embracing anything that feels vaguely off point. Local stocks are up only +2.4% year to-date compared to the S&P500 at +5.8% and it’s been weighed down by the heavyweight tech sector which has struggled as bond yields have rallied higher (both basis yesterday afternoon). The selling which drove stocks down yesterday was broad based and fairly unrelenting although not aggressive and outside of the Gold Sector there weren’t many bright areas – it felt to me like stocks were trying to 2nd guess how US stocks would digest the Feds rhetoric after a good night’s sleep, they were clearly nervous which has proved well founded given the Nasdaq’s ~3% decline.
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