In April we looked at the Australian Property Sector concluding that we felt that value was returning to the sector following its more than 30% correction since January 2022. We are all aware that whether it be residential, or commercial, that property has struggled for over a year as a result of surging interest rates i.e. not that long ago you could fix a 4-year home loan at 2%, today the same loan is well over 5%.
Markets are expected to open strongly this morning following the welcome news that a US debt default has been averted with yet another last-minute deal, these politicians have the timing of a Hollywood thriller! The announcement wasn’t serenaded with any celebratory fireworks as the tentative agreement to raise the debt ceiling over the next 2-years was clearly an uncomfortable compromise by both parties to get it before Congress for the final tick of approval.
On a day when the ASX fell over -1% the building stocks stood out to us as the main 4 winners in an otherwise especially tough session for the Materials Sector. The Australian building products names haven’t fared as well as some of their US peers but they’ve certainly managed to bounce strongly in 2023 after being smashed more than 50% in some cases, the question we ask today is should we be taking some profit after their strong moves?
US stocks fell again overnight as the debt ceiling debate drags on plus minutes from the recent Fed meeting showed members were split on whether to hike interest rates in June. The dust is settling after the Banking Crisis only to be replaced by the debt impasse, considering what’s been thrown at equities recently they’re holding reasonably well but the upside feels limited whenever the S&P500 tests the 4200 area.
The ASX200 continued to tread water on Tuesday with no fresh clear leads for investors to key off – the EOFY is looming and considering the plethora of worrying news that equities have been exposed to over the last 12 months our “Gut Feel” is the market could squeeze higher although it’s not a move we would position ourselves for especially with US politicians currently bickering around the debt ceiling.
Lithium stocks are arguably the sector which has garnered the most attention from subscribers post-COVID with many stocks surging higher as the EV revolution gathers momentum. Volatility as is often the case with “hot sectors” is ever-present but even after regular 15,20 and 40% pullbacks most of the quality names are close to their all-time highs helped by corporate activity breaking onto the scene.
The Fed has been fixated on inflation over the last year as it hiked Official Interest Rates more than 5% peaking at today’s 5-5.25% target range but we’re finally seeing signs that Jerome Powell et al might stand back and observe the economy for a few months/quarters before raising rates again in 2023:
The ASX200 rallied over +0.5% on Thursday although again we saw some selling into strength with the market relinquishing ~40% of its early morning gains. Under the hood, we saw over 60% of the market advance with Tech names continuing their march higher, this time helped by the bullish sentiment following a positive earnings report from Xero (XRO) which ultimately closed +8.9% higher, the “tech v Miners” elastic band which MM has been discussing at length recently continues to stretch ever higher.
Fertilizer and explosive business IPL fell -7.8% yesterday giving it the unenviable position of the worst performing stock on the main bourse after its 1H23 earnings missed the mark by around 7-10%, weakness in its fertilizer division received the most blame. Earnings were also hurt by floods and the prices of commodities used to make the said fertilizers, not ideal scenarios with both of the these issues uncontrollable by IPL making their earnings harder to predict. This morning we have briefly looked at IPL and a couple of other related businesses which have endured a tough few months to evaluate if its time to start considering these out of favour names – note we have focused more on the fertilizer side as IPL’s explosives division remains solid.
Global central banks maintained their fight against inflation this month with the Bank of England, Fed, ECB and RBA all hiking interest rates, most moves were expected but the rhetoric has remained on the hawkish side which has restrained equities although they are still largely close to their multi-month highs. The minutes from the RBA’s May meeting did stocks no favours on Tuesday as they reiterated that “further increases in interest rates may be required” although such a move would depend on how the economy and inflation travelled through 2023/4. In our opinion a major risk to the “risk on” trade is markets are looking for a central bank pivot leaving plenty of room for disappointment for the dovish investors:
Markets are expected to open strongly this morning following the welcome news that a US debt default has been averted with yet another last-minute deal, these politicians have the timing of a Hollywood thriller! The announcement wasn’t serenaded with any celebratory fireworks as the tentative agreement to raise the debt ceiling over the next 2-years was clearly an uncomfortable compromise by both parties to get it before Congress for the final tick of approval.
On a day when the ASX fell over -1% the building stocks stood out to us as the main 4 winners in an otherwise especially tough session for the Materials Sector. The Australian building products names haven’t fared as well as some of their US peers but they’ve certainly managed to bounce strongly in 2023 after being smashed more than 50% in some cases, the question we ask today is should we be taking some profit after their strong moves?
US stocks fell again overnight as the debt ceiling debate drags on plus minutes from the recent Fed meeting showed members were split on whether to hike interest rates in June. The dust is settling after the Banking Crisis only to be replaced by the debt impasse, considering what’s been thrown at equities recently they’re holding reasonably well but the upside feels limited whenever the S&P500 tests the 4200 area.
The ASX200 continued to tread water on Tuesday with no fresh clear leads for investors to key off – the EOFY is looming and considering the plethora of worrying news that equities have been exposed to over the last 12 months our “Gut Feel” is the market could squeeze higher although it’s not a move we would position ourselves for especially with US politicians currently bickering around the debt ceiling.
Lithium stocks are arguably the sector which has garnered the most attention from subscribers post-COVID with many stocks surging higher as the EV revolution gathers momentum. Volatility as is often the case with “hot sectors” is ever-present but even after regular 15,20 and 40% pullbacks most of the quality names are close to their all-time highs helped by corporate activity breaking onto the scene.
The Fed has been fixated on inflation over the last year as it hiked Official Interest Rates more than 5% peaking at today’s 5-5.25% target range but we’re finally seeing signs that Jerome Powell et al might stand back and observe the economy for a few months/quarters before raising rates again in 2023:
The ASX200 rallied over +0.5% on Thursday although again we saw some selling into strength with the market relinquishing ~40% of its early morning gains. Under the hood, we saw over 60% of the market advance with Tech names continuing their march higher, this time helped by the bullish sentiment following a positive earnings report from Xero (XRO) which ultimately closed +8.9% higher, the “tech v Miners” elastic band which MM has been discussing at length recently continues to stretch ever higher.
Fertilizer and explosive business IPL fell -7.8% yesterday giving it the unenviable position of the worst performing stock on the main bourse after its 1H23 earnings missed the mark by around 7-10%, weakness in its fertilizer division received the most blame. Earnings were also hurt by floods and the prices of commodities used to make the said fertilizers, not ideal scenarios with both of the these issues uncontrollable by IPL making their earnings harder to predict. This morning we have briefly looked at IPL and a couple of other related businesses which have endured a tough few months to evaluate if its time to start considering these out of favour names – note we have focused more on the fertilizer side as IPL’s explosives division remains solid.
Global central banks maintained their fight against inflation this month with the Bank of England, Fed, ECB and RBA all hiking interest rates, most moves were expected but the rhetoric has remained on the hawkish side which has restrained equities although they are still largely close to their multi-month highs. The minutes from the RBA’s May meeting did stocks no favours on Tuesday as they reiterated that “further increases in interest rates may be required” although such a move would depend on how the economy and inflation travelled through 2023/4. In our opinion a major risk to the “risk on” trade is markets are looking for a central bank pivot leaving plenty of room for disappointment for the dovish investors:
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