The ASX200 enjoyed an extremely bullish turnaround to kick off both the week and February, after being down 90-points late morning the sentiment turned on a sixpence as “risk on” prevailed across the board – on the local bourse we finally closed up almost 1% with 60% of the market rallying led by the Healthcare & Resources Sectors. Elsewhere Asia followed suit with most major indices gaining over 2% while silver soared over 10% to make an 8-year high as the “Reddit Army” turned its attention to commodities - as we keep saying volatility is set to rule in 2021.
Over the weekend the market news was mildly negative in my opinion as 80% of WA’s population went into a COVID lockdown for the first time in over 6-months. A new case has been recorded of the potentially highly infectious UK strain of the virus by a hotel guard who never actually entered a hotel room.
The ASX200 was smacked almost 2% yesterday with close to 90% of the market closing down on the day, declines were led by the IT Sector which tumbled almost 5% with Xero (XRO), Afterpay (APT) and Wisetech (WTC) all closing more than 6% lower. The rhetoric in many news stories was pointing the finger at earnings disappointments and concerns around valuations following sharp drops on overseas bourses, falls which we felt were initially triggered by potential hurdles around the European vaccine rollout.
The ASX200 struggled yesterday finally closing down 44-points, or 0.65%, it felt worse at the time but when less than 60% of the index falls the drop is rarely too severe.
Australia Day is behind us and schools go back this week, to many it feels like summer is already in the rear view mirror although to be precise the 1st of March is the start of Autumn. Almost one month into 2021 and the ASX has ground out a +3.6% gain with the Banks and large cap Resources leading the line, at MM we’ve called this to be a positive year highlighted by some periods of elevated volatility probably the one ingredient that’s been missing totally absent from stocks in January but never say never, the year is young. Investors shouldn’t get too bullish, over the last decade the average gain for Q1 is only +3.5% and we’re already there.
Over the weekend the market news was again fairly thin on the ground although it was very pleasing to again see no new locally transmitted COVID cases, just imagine the US and UK are still posting over 160,000 & 30,000 fresh daily cases respectively. With a vaccine scheduled to be rolled out in March it feels pretty good on both the humane and economic front assuming we don’t become complacent. We should be positioned to recover far more rapidly than many of our trading partners but it’s the ongoing COVID global disruption that’s likely to keep our interest rates lower for longer – remember in November the RBA committed to maintain 3-year bonds at 0.1% enabling banks to offer 4-year fixed home loans under 2%.
The ASX200 continued to make fresh 11-month highs yesterday with again only 60% of the index posting gains but with the exception of CSL Ltd (CSL) the winners were focused were it mattered from a points perspective propelling the market over 50-points higher e.g. The “Big 4” Banks, Wesfarmers (WES), BHP and RIO all rallied well over 1%. Global equities are clearly embracing the combination of ongoing huge fiscal / monetary stimulus plus the hope that Joe Biden will deliver stability around global trade.
However it wasn’t all roses under the hood as Cleanaway Waste (CWY) fell over 8% following the retirement of its Chief Executive Vik Bansal after 5-years’ in the seat – the bullying incident and associated uprising a few months ago clearly the catalyst for his departure. While we’ve had Cleanaway on our hitlist for a while, the pullback hasn’t convinced MM that its time to buy back into the business. We are keener on a few stocks that already appear to have found a decent swing low such as Aristocrat Leisure (ALL) which we touched on yesterday – watch for alerts today.
The ASX200 made fresh 11-month highs yesterday illustrating even though we feel a pullback may occur MM has no interest in losing our significant core exposure to equities, remember “the trend is your friend” and its clearly been up since last March – we may take some money off the table in the coming months but it simply still feels too early. Wednesdays push to multi month highs was reasonably broad based with 60% of the index advancing as the performance baton was passed from the Banks back to the IT Sector, there’s no rest for the bears as buyers still look keen to buy any dips.
After struggling over recent months the IT Sector was the standout yesterday advancing +2.5% but interestingly, Afterpay (APT) aside, it’s some of the weaker names like Wisetech (WTC) and Bravura (BVS) that have started leading the charge with one on the star performers of the last 6-months Xero (XRO) appearing to be seeing some profit taking as it corrects almost 20% in just a few weeks – investors are getting on the front foot and rotating between stocks / sectors as we expected, MM definitely expects to be on this train through 2021.
The ASX200 gave back over 50-points yesterday with 65% of stocks falling, declines were led by the Banks and Resources with some clear “risk off” profit taking washing through the market. The news was thin on the ground but in unison with a pullback in the Aussie and a wobbly US futures market we saw the buyers simply back off letting the sellers win the day, importantly there was nothing aggressive / scary about the session plus remember our “Gut Feel” is we see the index dip under 6500 before the uptrend resumes.
Over the weekend the market news was fairly thin, but it was interesting to see it in black and white that the RBA expects their current aggressive stance on interest rates to fuel a surge in house prices, they actually anticipate such a move to be somewhere between +10% and +30% over 3-years depending on whether homeowners / investors become complacent that it’s the new norm. The message beneath the surface is clear in our opinion:
1 – If house prices pop too hard expect the RBA to again act to rein in the gains through increasing interest rates.
2 – The RBA are watching the loan to value data closely simply because they don’t want to see a major outbreak of negative equity when interest rates rise and housing prices potentially correct.
Over the weekend the market news was mildly negative in my opinion as 80% of WA’s population went into a COVID lockdown for the first time in over 6-months. A new case has been recorded of the potentially highly infectious UK strain of the virus by a hotel guard who never actually entered a hotel room.
The ASX200 was smacked almost 2% yesterday with close to 90% of the market closing down on the day, declines were led by the IT Sector which tumbled almost 5% with Xero (XRO), Afterpay (APT) and Wisetech (WTC) all closing more than 6% lower. The rhetoric in many news stories was pointing the finger at earnings disappointments and concerns around valuations following sharp drops on overseas bourses, falls which we felt were initially triggered by potential hurdles around the European vaccine rollout.
The ASX200 struggled yesterday finally closing down 44-points, or 0.65%, it felt worse at the time but when less than 60% of the index falls the drop is rarely too severe.
Australia Day is behind us and schools go back this week, to many it feels like summer is already in the rear view mirror although to be precise the 1st of March is the start of Autumn. Almost one month into 2021 and the ASX has ground out a +3.6% gain with the Banks and large cap Resources leading the line, at MM we’ve called this to be a positive year highlighted by some periods of elevated volatility probably the one ingredient that’s been missing totally absent from stocks in January but never say never, the year is young. Investors shouldn’t get too bullish, over the last decade the average gain for Q1 is only +3.5% and we’re already there.
Over the weekend the market news was again fairly thin on the ground although it was very pleasing to again see no new locally transmitted COVID cases, just imagine the US and UK are still posting over 160,000 & 30,000 fresh daily cases respectively. With a vaccine scheduled to be rolled out in March it feels pretty good on both the humane and economic front assuming we don’t become complacent. We should be positioned to recover far more rapidly than many of our trading partners but it’s the ongoing COVID global disruption that’s likely to keep our interest rates lower for longer – remember in November the RBA committed to maintain 3-year bonds at 0.1% enabling banks to offer 4-year fixed home loans under 2%.
The ASX200 continued to make fresh 11-month highs yesterday with again only 60% of the index posting gains but with the exception of CSL Ltd (CSL) the winners were focused were it mattered from a points perspective propelling the market over 50-points higher e.g. The “Big 4” Banks, Wesfarmers (WES), BHP and RIO all rallied well over 1%. Global equities are clearly embracing the combination of ongoing huge fiscal / monetary stimulus plus the hope that Joe Biden will deliver stability around global trade.
However it wasn’t all roses under the hood as Cleanaway Waste (CWY) fell over 8% following the retirement of its Chief Executive Vik Bansal after 5-years’ in the seat – the bullying incident and associated uprising a few months ago clearly the catalyst for his departure. While we’ve had Cleanaway on our hitlist for a while, the pullback hasn’t convinced MM that its time to buy back into the business. We are keener on a few stocks that already appear to have found a decent swing low such as Aristocrat Leisure (ALL) which we touched on yesterday – watch for alerts today.
The ASX200 made fresh 11-month highs yesterday illustrating even though we feel a pullback may occur MM has no interest in losing our significant core exposure to equities, remember “the trend is your friend” and its clearly been up since last March – we may take some money off the table in the coming months but it simply still feels too early. Wednesdays push to multi month highs was reasonably broad based with 60% of the index advancing as the performance baton was passed from the Banks back to the IT Sector, there’s no rest for the bears as buyers still look keen to buy any dips.
After struggling over recent months the IT Sector was the standout yesterday advancing +2.5% but interestingly, Afterpay (APT) aside, it’s some of the weaker names like Wisetech (WTC) and Bravura (BVS) that have started leading the charge with one on the star performers of the last 6-months Xero (XRO) appearing to be seeing some profit taking as it corrects almost 20% in just a few weeks – investors are getting on the front foot and rotating between stocks / sectors as we expected, MM definitely expects to be on this train through 2021.
The ASX200 gave back over 50-points yesterday with 65% of stocks falling, declines were led by the Banks and Resources with some clear “risk off” profit taking washing through the market. The news was thin on the ground but in unison with a pullback in the Aussie and a wobbly US futures market we saw the buyers simply back off letting the sellers win the day, importantly there was nothing aggressive / scary about the session plus remember our “Gut Feel” is we see the index dip under 6500 before the uptrend resumes.
Over the weekend the market news was fairly thin, but it was interesting to see it in black and white that the RBA expects their current aggressive stance on interest rates to fuel a surge in house prices, they actually anticipate such a move to be somewhere between +10% and +30% over 3-years depending on whether homeowners / investors become complacent that it’s the new norm. The message beneath the surface is clear in our opinion:
1 – If house prices pop too hard expect the RBA to again act to rein in the gains through increasing interest rates.
2 – The RBA are watching the loan to value data closely simply because they don’t want to see a major outbreak of negative equity when interest rates rise and housing prices potentially correct.
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
Verication email sent.
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
!
Invalid One Time Password
Please check you entered the correct info, please also note there is a 10minute time limit on the One Time Passcode
To reset your password, enter your email address
A link to create a new password will be sent to the email address you have registered to your account.
Market Matters members receive daily market reports, real-time trade alerts, full access to 5 portfolios and dynamic company data.
Choose how you'd like to proceed:
We have a range of membership options to suit your needs and budget, why not join today and get unlimited access to the premium Market Matters service.
