The ASX200 started the week in disappointing fashion closing down 0.8% with over 60% of the main board finishing in negative territory. The performance looked even worse on the sector level with 10 of the 11 sectors closing lower, led by the Energy, Healthcare and Consumer Discretionary, which all fell over 1%. The market accelerated lower as US futures turned down into lunchtime AEST while importantly there was one-way traffic on the company news front, and it was all negative
It has traditionally been very hard to track the lithium (Li) price closely as sales are conducted via contracts and rely on a benchmarking service to provide a reference price, however, the industry is edging towards more transparent auctions as the likes of Pilbara (PLS) and more recently Albemarle Corp (ALB US) plan to sell more product using an this clearer approach. Perhaps they should be careful what they wish for as Li tests new multi-year lows! Australia’s 6th largest export has plunged over 80% in price since late 2022 causing havoc amongst the producers as the market has gone from fears of shortages to a glut in inventories. This year alone has witnessed some dramatic underperformance from Li related names which has weighed on the broader Resources Sector.
The ASX200 closed unchanged on Thursday with no lead from overseas markets; most local traders simply sat back and watched the Guzman y Gomez (GYG) IPO commence trading. By the end of the day, GYG was up +36%, valuing the Mexican fast food chain at over $3bn. At MM, we thought it would open strongly, but that was above our bullish expectations. As we said yesterday, let's hope this reignites some confidence in both local capital markets and stocks in general.
The ASX200 had a quiet Wednesday as it limped into the US Juneteenth National Independence Day holiday. The market ended the session down just 0.1%, with winners and losers almost exactly matched. If anything, we saw a little stock/sector rotation, with profit taking evident in some of the year's best-performing stocks, but on such a holiday-style low-volume day, little should be read into the action.
The ASX200 enjoyed a strong day at the office on Tuesday, adding to a solid opening throughout the day to finish up over 1%. Gains were encouragingly broad-based, with over 75% of the main board and all 11 sectors closing in positive territory as sellers appeared to take a lead from the looming US Juneteenth National Independence Day holiday. There were a couple of standout moves that should unsettle the numerous bears who are getting plenty of air time in the press.
China's housing crisis deteriorated in May, triggering further calls for Beijing to support the important economic area. Yesterday's data was the worst since 2011. The property market has weighed on China's economic growth for years, and yesterday saw declines in real estate investment and home prices gather pace. Also, industrial production missed expectations for May, rising 5.6% from a year earlier but slowing from April. The only encouraging light on Monday was Retail Sales improving faster than expected, but the net result is China is still experiencing a weak economic recovery, with Beijing needing to step up if it's going to achieve its 5% growth target.
French President Macron is playing a huge game of chess, poker, or maybe even chicken after making the calculated gamble that the French people won't hand over power to Marie Le Pen and the Far Right. Last Sunday’s European elections stunned the region as the Far Right Parties' popularity surged. The National Rally Party secured around twice as many votes as Macron’s Renaissance Party. Hence, the President's large throw of the dice, which has unsettled the French CAC-40 and other European equity indices.
A whopping 9% of the ASX200 is up over 30% so far in 2024, although a lot of better-known “high flyers” didn’t make the cut with such a high bar. Surprisingly, after moves on the sector level, there were still plenty of miners in the winner's enclosure driven by stock specific influences – which is true across the list below. While the Macro is important, and we place a lot of emphasis on it, stock picking is where the rubber hits the road.
We all know that 2024 has delivered a noticeably differing performance on the sector level so far, and this particular elastic band is likely to be stretched further this morning. The Tech Sector has outperformed the Materials by a whopping 35%. After moves overnight and renewed Chinese economic jitters, we could easily see it reach 40% this FY. Under the hood, the markets delivered even greater divergence of performance, with 5% of ASX200 stocks down 30% or more. Over the same period, the markets rallied ~1.6% before dividends, not a huge gain but still on the correct side of the ledger. This is a great example that avoiding losers is every bit as important as picking winners; one of the reasons MM Active Growth Portfolio is enjoying another solid year is that we’ve avoided 9 of the 10 names altogether while only enduring part of Corporate Travel’s (CTD) -33% decline so far this year.
We are less than halfway into June, and Europe has already elevated volatility across equity markets following a rate cut by the ECB and looming elections in the UK and France, where, in both cases, the incumbent party is in real danger of being ousted. There is an old saying that when the Dow sneezes, the ASX catches a cold; however, in the current market environment, the ASX is far more correlated to European stocks on a day-to-day basis, although, unfortunately, we have been underperforming both regions so far this year.
It has traditionally been very hard to track the lithium (Li) price closely as sales are conducted via contracts and rely on a benchmarking service to provide a reference price, however, the industry is edging towards more transparent auctions as the likes of Pilbara (PLS) and more recently Albemarle Corp (ALB US) plan to sell more product using an this clearer approach. Perhaps they should be careful what they wish for as Li tests new multi-year lows! Australia’s 6th largest export has plunged over 80% in price since late 2022 causing havoc amongst the producers as the market has gone from fears of shortages to a glut in inventories. This year alone has witnessed some dramatic underperformance from Li related names which has weighed on the broader Resources Sector.
The ASX200 closed unchanged on Thursday with no lead from overseas markets; most local traders simply sat back and watched the Guzman y Gomez (GYG) IPO commence trading. By the end of the day, GYG was up +36%, valuing the Mexican fast food chain at over $3bn. At MM, we thought it would open strongly, but that was above our bullish expectations. As we said yesterday, let's hope this reignites some confidence in both local capital markets and stocks in general.
The ASX200 had a quiet Wednesday as it limped into the US Juneteenth National Independence Day holiday. The market ended the session down just 0.1%, with winners and losers almost exactly matched. If anything, we saw a little stock/sector rotation, with profit taking evident in some of the year's best-performing stocks, but on such a holiday-style low-volume day, little should be read into the action.
The ASX200 enjoyed a strong day at the office on Tuesday, adding to a solid opening throughout the day to finish up over 1%. Gains were encouragingly broad-based, with over 75% of the main board and all 11 sectors closing in positive territory as sellers appeared to take a lead from the looming US Juneteenth National Independence Day holiday. There were a couple of standout moves that should unsettle the numerous bears who are getting plenty of air time in the press.
China's housing crisis deteriorated in May, triggering further calls for Beijing to support the important economic area. Yesterday's data was the worst since 2011. The property market has weighed on China's economic growth for years, and yesterday saw declines in real estate investment and home prices gather pace. Also, industrial production missed expectations for May, rising 5.6% from a year earlier but slowing from April. The only encouraging light on Monday was Retail Sales improving faster than expected, but the net result is China is still experiencing a weak economic recovery, with Beijing needing to step up if it's going to achieve its 5% growth target.
French President Macron is playing a huge game of chess, poker, or maybe even chicken after making the calculated gamble that the French people won't hand over power to Marie Le Pen and the Far Right. Last Sunday’s European elections stunned the region as the Far Right Parties' popularity surged. The National Rally Party secured around twice as many votes as Macron’s Renaissance Party. Hence, the President's large throw of the dice, which has unsettled the French CAC-40 and other European equity indices.
A whopping 9% of the ASX200 is up over 30% so far in 2024, although a lot of better-known “high flyers” didn’t make the cut with such a high bar. Surprisingly, after moves on the sector level, there were still plenty of miners in the winner's enclosure driven by stock specific influences – which is true across the list below. While the Macro is important, and we place a lot of emphasis on it, stock picking is where the rubber hits the road.
We all know that 2024 has delivered a noticeably differing performance on the sector level so far, and this particular elastic band is likely to be stretched further this morning. The Tech Sector has outperformed the Materials by a whopping 35%. After moves overnight and renewed Chinese economic jitters, we could easily see it reach 40% this FY. Under the hood, the markets delivered even greater divergence of performance, with 5% of ASX200 stocks down 30% or more. Over the same period, the markets rallied ~1.6% before dividends, not a huge gain but still on the correct side of the ledger. This is a great example that avoiding losers is every bit as important as picking winners; one of the reasons MM Active Growth Portfolio is enjoying another solid year is that we’ve avoided 9 of the 10 names altogether while only enduring part of Corporate Travel’s (CTD) -33% decline so far this year.
We are less than halfway into June, and Europe has already elevated volatility across equity markets following a rate cut by the ECB and looming elections in the UK and France, where, in both cases, the incumbent party is in real danger of being ousted. There is an old saying that when the Dow sneezes, the ASX catches a cold; however, in the current market environment, the ASX is far more correlated to European stocks on a day-to-day basis, although, unfortunately, we have been underperforming both regions so far this year.
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