The hot CPI print on Wednesday caught the market's napping. Expectations were for 3.8% Year-on-Year (YoY), but unfortunately, it came in at 4.0%. The ramifications for most Australians and equities were clearly on display after the 11.30am data. While the monthly numbers don’t include all components and the RBA gives more weight to the quarterly print, the increase from April's 3.6% suggests inflation is frustratingly still “sticky” after three consecutive months of upward pressure; concerns are growing that a 14th rate hike by the RBA is nigh.
The ASX200 feels poised to breakout on the upside and if were to add a technical caveat to this “Gut Feel” it would simply be while the index can hold above 7780, i.e. from a trading perspective that’s only a 0.7% lower. However at MM we are Active Investors, not traders, hence short term noise is interesting at times but it doesn’t influence our outlook or subsequent positioning. We have noticed, with some frustration, the markets delivered a noticeable degree of performance reversion on the stock level over the last 4-6 weeks, i.e. our Active Growth Portfolio has surrendered some its outperformance. Hence one factor we are monitoring closely is whether 2024 will become a year of two halves from a performance perspective.
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.
The ASX200 feels poised to breakout on the upside and if were to add a technical caveat to this “Gut Feel” it would simply be while the index can hold above 7780, i.e. from a trading perspective that’s only a 0.7% lower. However at MM we are Active Investors, not traders, hence short term noise is interesting at times but it doesn’t influence our outlook or subsequent positioning. We have noticed, with some frustration, the markets delivered a noticeable degree of performance reversion on the stock level over the last 4-6 weeks, i.e. our Active Growth Portfolio has surrendered some its outperformance. Hence one factor we are monitoring closely is whether 2024 will become a year of two halves from a performance perspective.
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.
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.
