The ASX200 was hammered yesterday, losing over 150-points and retracing over 30% of August's recovery in one fell swoop – a classic case of up by the stairs and down by the elevator. Losses were broad-based, with all 11 sectors and over 90% of stocks closing lower, a bad day at the office being an understatement. The influential banks and resources followed the negative lead from the US, with all eyes now turning to Friday’s US Jobs report; if it comes in poor, we may be in store for a repeat of early August as recession fears mount. US credit markets are already pricing in one 0.25% rate cut this month (with the possibility of 0.5% in play) and a full 1% by Christmas.
Overnight equities endured a tough session. The EURO STOXX 50, which led European bourses, fell 1.2%, reversing early small gains as US weakness weighed on sentiment. The tech-based NASDAQ tumbled over 3%, dragging the S&P500 down 2.1%, with Nvidia’s sharp ~10% drop setting the stage for an already jumpy market capable of swinging dramatically on any unfavourable economic data. This morning, our first thought was whether September would start in a volatile fashion similar to August, it feels like another wave of recession fears is just one major piece of economic data away with non-farm payrolls due on Friday a very important read.
The story remains the same as we kick off September, with the ASX200 falling early in the session before clawing back all of the losses to end the session higher, with the banks again performing the heavy lifting – the “Big Four” advanced an average of +1.2% after all four traded lower in the first hour. Less than 55% of the main board closed higher, but the influential big-4 were enough to offset another tough session for the embattled miners as China’s economy continues to struggle.
We often trot out the saying, “There are lies damned lies and statistics.” but at MM, we still believe investors should be aware of the seasonal statistics, even if we decide to ignore them. As late scientist Dr. Carl Sagan said, “You have to know the past to understand the present.” An amazing August is in the rearview mirror, which incredibly, ended unchanged after plunging over 500 points in just a few days before recovering all the losses. Now, It is time to consider September and the run into Christmas:
Artificial Intelligence (AI) has often been the market’s focus over recent years, and never more so than yesterday after Nvidia (NVDA US) posted its second-quarter results. In summary, the world's most famous AI play produced US$30 billion revenue in the quarter, its adjusted earnings per share (EPS) rose by 152%, and it is planning a US$50 billion share buyback, but the stock still fell over 6%, with “great” not being good enough after the stock's parabolic gains over the last year.
The FANG+ Index is a good gauge of the health of the aptly named “Magnificent Seven” stocks, which have lifted US indices higher over the last twenty months. The recent ~21% sharp pullback illustrates that even the most robust pockets of the market retrace when they get ahead of themselves, i.e. positions become “crowded” leaving fresh buying scarce at best. We don’t believe the advance is over, but it's maturing, which is likely to see the weaker members start/continue to struggle.
The ASX200 surrendered early gains on Tuesday to close down -0.2%, with over 60% of the main board ending the session lower. It was a rare day of weakness for the banks and strength in the resources, but as we often say, the market can't go up without the banks. The “Big Four” slipped an average of -0.7% while Bendigo (BEN) tumbled -4.2% following their average FY24 result on Monday, i.e. after surging over +30% year-to-date, the market expected more.
Fed Chair Jerome Powell spoke at the Jackson Hole Economic Symposium on Friday night, and said all the right things, reaffirming the markets' belief that interest rate cuts are just around the corner, but importantly, also highlighted confidence in the economy, which allayed some recent concerns about a potential recession.
Yesterday, Whitehaven Coal (WHC) announced that Nippon Steel and JFE Steel had bought 30% of their recently acquired Blackwater Met Coal Mine for $US1.1bn, a very useful and well-received cash injection. Interestingly, Japanese giant Nippon Steel said the Queensland government’s coal royalties grab influenced its decision to spend over $US1 billion buying the stake amid rising concerns over supply security, although such concerns haven’t yet been reflected in the coal price, which is trading at 2-year lows. They are understandably concerned that the QLD government's royalty hike and increasing headwinds around funding will discourage future investments. Politicians and financers are playing an important role in the future evolution of our coal industry, not necessarily a healthy mix
Overnight equities endured a tough session. The EURO STOXX 50, which led European bourses, fell 1.2%, reversing early small gains as US weakness weighed on sentiment. The tech-based NASDAQ tumbled over 3%, dragging the S&P500 down 2.1%, with Nvidia’s sharp ~10% drop setting the stage for an already jumpy market capable of swinging dramatically on any unfavourable economic data. This morning, our first thought was whether September would start in a volatile fashion similar to August, it feels like another wave of recession fears is just one major piece of economic data away with non-farm payrolls due on Friday a very important read.
The story remains the same as we kick off September, with the ASX200 falling early in the session before clawing back all of the losses to end the session higher, with the banks again performing the heavy lifting – the “Big Four” advanced an average of +1.2% after all four traded lower in the first hour. Less than 55% of the main board closed higher, but the influential big-4 were enough to offset another tough session for the embattled miners as China’s economy continues to struggle.
We often trot out the saying, “There are lies damned lies and statistics.” but at MM, we still believe investors should be aware of the seasonal statistics, even if we decide to ignore them. As late scientist Dr. Carl Sagan said, “You have to know the past to understand the present.” An amazing August is in the rearview mirror, which incredibly, ended unchanged after plunging over 500 points in just a few days before recovering all the losses. Now, It is time to consider September and the run into Christmas:
Artificial Intelligence (AI) has often been the market’s focus over recent years, and never more so than yesterday after Nvidia (NVDA US) posted its second-quarter results. In summary, the world's most famous AI play produced US$30 billion revenue in the quarter, its adjusted earnings per share (EPS) rose by 152%, and it is planning a US$50 billion share buyback, but the stock still fell over 6%, with “great” not being good enough after the stock's parabolic gains over the last year.
The FANG+ Index is a good gauge of the health of the aptly named “Magnificent Seven” stocks, which have lifted US indices higher over the last twenty months. The recent ~21% sharp pullback illustrates that even the most robust pockets of the market retrace when they get ahead of themselves, i.e. positions become “crowded” leaving fresh buying scarce at best. We don’t believe the advance is over, but it's maturing, which is likely to see the weaker members start/continue to struggle.
The ASX200 surrendered early gains on Tuesday to close down -0.2%, with over 60% of the main board ending the session lower. It was a rare day of weakness for the banks and strength in the resources, but as we often say, the market can't go up without the banks. The “Big Four” slipped an average of -0.7% while Bendigo (BEN) tumbled -4.2% following their average FY24 result on Monday, i.e. after surging over +30% year-to-date, the market expected more.
Fed Chair Jerome Powell spoke at the Jackson Hole Economic Symposium on Friday night, and said all the right things, reaffirming the markets' belief that interest rate cuts are just around the corner, but importantly, also highlighted confidence in the economy, which allayed some recent concerns about a potential recession.
Yesterday, Whitehaven Coal (WHC) announced that Nippon Steel and JFE Steel had bought 30% of their recently acquired Blackwater Met Coal Mine for $US1.1bn, a very useful and well-received cash injection. Interestingly, Japanese giant Nippon Steel said the Queensland government’s coal royalties grab influenced its decision to spend over $US1 billion buying the stake amid rising concerns over supply security, although such concerns haven’t yet been reflected in the coal price, which is trading at 2-year lows. They are understandably concerned that the QLD government's royalty hike and increasing headwinds around funding will discourage future investments. Politicians and financers are playing an important role in the future evolution of our coal industry, not necessarily a healthy mix
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