The ASX200 edged higher yesterday in quiet trading compounding its gains for 2023 to 6% after just 3 weeks of trading, the index was actually higher earlier in the day but some selling, most notably across iron ore names, was enough to see the index surrender 75% of the early advance. The broad-based market is starting to feel understandably tired after surging well over 1000 points in less than 4 months although the Tech Sector is finally attracting some buying as inflation fears subside.
Australian stocks continue to defy gravity and overall investor sentiment, this morning they look set to open less than 2% below last year’s all-time high even while interest rates soar, housing prices fall and US stocks struggle i.e. the S&P500 closed higher on Friday but still a painful 21% below its last 2021 top. It’s not just the obvious miners that are dragging the ASX higher the banks remain very strong with heavyweight CBA less than 1.5% below its top before we even consider its excellent yield.
The ASX200 put in an extremely impressive performance yesterday rallying +0.57% posting its highest level since May in the process, all after the Dow had tumbled more than 600 points following weak economic data (Retail Sales & Producer Price Index). On Thursday we saw Australian unemployment unexpectedly nudge higher to 3.5% while the participation rate dropped 0.2% following a surprise drop in employment, as would be expected bond yields fell as investors hoped for the end to rate hikes sooner rather than later. Under the hood the story remains a touch clouded:
The ASX200 edged up +0.1% yesterday helped by further gains by the Tech Sector while losses in Real Estate & Utilities dragged on the index although it was overall a quiet day illustrated by only two stocks on the main board moving by more than 5%. The Bank of Japan (BOJ) produced the most fireworks during the lacklustre session when they surprised many pundits ignoring market speculation/expectations for policy tweaks sending the Yen tumbling in the process. There were some major moves at 2 pm on the announcement albeit fleeting in some cases:
The $US has fallen over 11% since late September spiking life back into the likes of gold, silver and copper taking the Australian Resources Sector along for the ride e.g. this week even saw the “Big Australian” BHP Group (BHP) hit $50 for the first time. However, as Shawn discussed on AusBiz yesterday MM doesn’t believe it’s going to be a one-directional journey for this influential sector which could provide an excellent platform for investors’ portfolios over the coming years if navigated correctly. Our view is basically split into 2 parts:
The ASX200 rallied another +0.8% yesterday on broad-based buying reaching levels not enjoyed since June of last year, over 75% of the index advanced, and all 11 sectors advanced while in the loser’s corner lithium and iron ore names were the market’s weakest pockets. As we head into what most pundits believe is an almost certain recession the local market is now only 3.2% below its pinnacle posted last August – investors might be bearish but the stock market is not listening.
We will deliver The MM Annual Outlook Report in the coming weeks but today’s first report for 2023 is likely to provide some clues on our current thinking for the coming year with stock/sector volatility looking set to be firmly on the menu yet again i.e. another year for the Active Investor. In a number of key financial markets, we have strong views on where they are travelling over the next 2-5 years but the next 3-6 months could easily see 10-20% reversions as varying dominant cycle thematic come in and out of favour such is the nature of today’s rapidly evolving macroeconomic landscape hence in our opinion investors must manage risk and be often prepared to “buy weakness and...
The ASX200 finally strung together two consecutive positive days courtesy of strong performances from overseas bourses, in quick fashion the local index had bounced almost 150 points, recovering more than 40% of December’s losses in the process – it’s, unfortunately, going to be a different story this morning. Thursday’s gains were fairly broad-based with over 75% of the index rallying with only the Resources Sector surrendering a little ground. A number of the growth stocks caught our attention in the winner’s enclosure as bond yields continue to consolidate their strong advance through 2022:
The ASX200 has embraced the saying “what a difference a day makes” in consummate style over the last 48 hours i.e. down aggressively on Tuesday following the BoJ’s hawkish tweak on interest rate policy followed by a +1.3% recovery yesterday, the net difference being down just 18 points. The local market’s advance yesterday was broad-based with over 85% of the main board rising as the bulls again started talking up the prospects of a late Christmas rally – certainly, anything is possible as volumes start to decline. There were a few standout sector performances as the news from Japan was dismissed almost as fast as it arrived:
The Bank of Japan (BOJ) shocked financial markets at 2 pm AEST when they adjusted their yield curve control program, in simple English they will allow Japan’s 10-year bond yields to rise to ~0.5% from the previous upper limit of 0.25% - at MM we all wish we could borrow money for 10-years at 0.5%, that would make a lovely present from Santa. However, at the same time, the central bank kept its short-term interest rates at minus -0.1%, significantly below the likes of Australia, Europe and the US.
Australian stocks continue to defy gravity and overall investor sentiment, this morning they look set to open less than 2% below last year’s all-time high even while interest rates soar, housing prices fall and US stocks struggle i.e. the S&P500 closed higher on Friday but still a painful 21% below its last 2021 top. It’s not just the obvious miners that are dragging the ASX higher the banks remain very strong with heavyweight CBA less than 1.5% below its top before we even consider its excellent yield.
The ASX200 put in an extremely impressive performance yesterday rallying +0.57% posting its highest level since May in the process, all after the Dow had tumbled more than 600 points following weak economic data (Retail Sales & Producer Price Index). On Thursday we saw Australian unemployment unexpectedly nudge higher to 3.5% while the participation rate dropped 0.2% following a surprise drop in employment, as would be expected bond yields fell as investors hoped for the end to rate hikes sooner rather than later. Under the hood the story remains a touch clouded:
The ASX200 edged up +0.1% yesterday helped by further gains by the Tech Sector while losses in Real Estate & Utilities dragged on the index although it was overall a quiet day illustrated by only two stocks on the main board moving by more than 5%. The Bank of Japan (BOJ) produced the most fireworks during the lacklustre session when they surprised many pundits ignoring market speculation/expectations for policy tweaks sending the Yen tumbling in the process. There were some major moves at 2 pm on the announcement albeit fleeting in some cases:
The $US has fallen over 11% since late September spiking life back into the likes of gold, silver and copper taking the Australian Resources Sector along for the ride e.g. this week even saw the “Big Australian” BHP Group (BHP) hit $50 for the first time. However, as Shawn discussed on AusBiz yesterday MM doesn’t believe it’s going to be a one-directional journey for this influential sector which could provide an excellent platform for investors’ portfolios over the coming years if navigated correctly. Our view is basically split into 2 parts:
The ASX200 rallied another +0.8% yesterday on broad-based buying reaching levels not enjoyed since June of last year, over 75% of the index advanced, and all 11 sectors advanced while in the loser’s corner lithium and iron ore names were the market’s weakest pockets. As we head into what most pundits believe is an almost certain recession the local market is now only 3.2% below its pinnacle posted last August – investors might be bearish but the stock market is not listening.
We will deliver The MM Annual Outlook Report in the coming weeks but today’s first report for 2023 is likely to provide some clues on our current thinking for the coming year with stock/sector volatility looking set to be firmly on the menu yet again i.e. another year for the Active Investor. In a number of key financial markets, we have strong views on where they are travelling over the next 2-5 years but the next 3-6 months could easily see 10-20% reversions as varying dominant cycle thematic come in and out of favour such is the nature of today’s rapidly evolving macroeconomic landscape hence in our opinion investors must manage risk and be often prepared to “buy weakness and...
The ASX200 finally strung together two consecutive positive days courtesy of strong performances from overseas bourses, in quick fashion the local index had bounced almost 150 points, recovering more than 40% of December’s losses in the process – it’s, unfortunately, going to be a different story this morning. Thursday’s gains were fairly broad-based with over 75% of the index rallying with only the Resources Sector surrendering a little ground. A number of the growth stocks caught our attention in the winner’s enclosure as bond yields continue to consolidate their strong advance through 2022:
The ASX200 has embraced the saying “what a difference a day makes” in consummate style over the last 48 hours i.e. down aggressively on Tuesday following the BoJ’s hawkish tweak on interest rate policy followed by a +1.3% recovery yesterday, the net difference being down just 18 points. The local market’s advance yesterday was broad-based with over 85% of the main board rising as the bulls again started talking up the prospects of a late Christmas rally – certainly, anything is possible as volumes start to decline. There were a few standout sector performances as the news from Japan was dismissed almost as fast as it arrived:
The Bank of Japan (BOJ) shocked financial markets at 2 pm AEST when they adjusted their yield curve control program, in simple English they will allow Japan’s 10-year bond yields to rise to ~0.5% from the previous upper limit of 0.25% - at MM we all wish we could borrow money for 10-years at 0.5%, that would make a lovely present from Santa. However, at the same time, the central bank kept its short-term interest rates at minus -0.1%, significantly below the likes of Australia, Europe and the US.
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