The “risk on” towards China theme was repeated across European bourses when they opened last night with mining giants Glencore Plc (GLEN LN) and Anglo American (AAL LN) trading higher from the opening bell although AAL saw its gains fade away throughout the day – MM holds Glencore in our International Equities Portfolio. Also, luxury-focused stocks that are heavily reliant on China for sales enjoyed a notable bid tone as investors/traders started to position themselves for a Beijing stimulus-led recovery. At this stage, we are getting some glimmers of hope from China's economy but once the picture does become clear we believe the horse will have bolted in terms of increasing portfolio exposure to an economic turnaround.
The US Tech Sector continues to follow the MM roadmap like a world-class rally co-driver, through July & August the FANG+ Index corrected over -13% before reversing on cue, however after just 3-weeks the picture has clearly changed with the index retracing over half of the decline and It's now only 5.7% below July’s all-time high. The Bears might be the most vocal but they’ve been losing the arm wrestle with the more muted Bulls all year. With central banks looking more and more like they’ve reached the pinnacle of their rate hiking cycle it's becoming increasingly easy to comprehend the rate-sensitive sector rallying to an all-time high into Christmas.
US stocks delivered a mixed performance overnight with the S&P500 closing down -0.16% with the Financials -0.4% and Real Estate Sectors -0.75% offsetting gains in tech +0.37% and Consumer Discretionary +0.5%, again! The NASDAQ eked out a small gain registering its 5th consecutive positive day but it still endured its worst month in 2023 falling over -2.1%. New inflation data, core personal consumption expenditure (PCE), came in as expected allowing yields to edge lower which helped the likes of tech on the day – volatility is set to rise in the coming days with nonfarm payrolls due tonight and lower liquidity ahead of Labor Day.
US stocks rallied for the 4th straight session overnight as economic data continued to signal that the Fed is approaching the end of its current hiking cycle. The S&P500 closed above 4500 while the NASDAQ finds itself less than 3% below its 2023 high, at MM we are still targeting a break of 16,000 in the coming weeks/months by the NASDAQ which is no longer a big call as Treasury yields edge lower with investors taking a “bad news is good” approach embracing that a slowing economy will lead to a more dovish Fed.
US indices rallied overnight delivering their best performance since June as bond yields retreated with economic data pointing to an end in the Feds tightening cycle. Almost 90% of the S&P500 closed higher led by the “tech mega-caps” as US 2-year treasury yields sank back below 4.9%. US job openings fell by more than expected to 8.83mn, another new 2-year low while consumer confidence fell amid a souring view towards jobs.
The ASX200 rallied +0.6% on Monday despite an average day on the reporting front which saw Fortescue (FMG) -5.1% and NEXTDC (NXT) -2.6% both fall after delivering their earnings numbers/forward guidance. However, on the day there were some very influential names in the winner's enclosure such as CSL Ltd (CSL) +1.7%, BHP Group (BHP) +1.2%, and Commonwealth Bank (CBA) +1.2% which when combined with over 60% of the main board advancing was enough to send the index higher.
Fed Chair Jerome Powell made it abundantly clear in his speech from Jackson Hole that the central bank would keep tightening if required to bring inflation back to its 2% target - its currently sitting at 3.2% after peaking above 9% in June 2022. As Powell reiterated from Wyoming “It’s the Fed’s job to bring inflation down to our 2% goal and we will do so”. Obviously, no mention was made about how/why the genie had escaped the lamp in the first place but we must acknowledge they have performed a solid job of reining it back in over the last ~18 months. Other comments while fairly hawkish were no surprise to MM:
Thursday again saw company earnings/forecasts dominate proceedings with 3 stocks falling between 10 & 12% while the best 3 performers averaged a gain of just over 7%. Unfortunately, It was a reporting day to forget for MM with 3 of our positions in the Flagship Growth Portfolio finding themselves in the proverbial naughty corner. The trend of the last 12-18 months is being magnified to almost extreme levels with plenty of stocks making fresh multi-year lows while a number of winners are nudging all-time highs. We are considering carefully a couple of our standout underperformers as we contemplate whether we should be adding or cutting i.e. will the weak simply keep getting weaker?
At MM we are not always contrarian investors but when we see Fund Managers have become the most bullish in 18 months just as stocks start to wobble in August our initial thought is should we start to skew portfolios more defensively? Funds managers are becoming increasingly optimistic around the US avoiding a recession with 31% of managers polled in the August survey now expecting no recession in 2024, up from 19% in July and 14% in June.
The ASX200 edged higher on Tuesday as reporting season dominated local stocks although attention is slowly moving towards Jackson Hole where we hope to get a read into the current mindset of central bankers. While we don’t expect any forward guidance from Powell and Lagarde, they won’t be telling us when/what the next move will be for interest rates, there are likely to be clues as to their current feelings, a common occurrence during their closely followed speeches.
The US Tech Sector continues to follow the MM roadmap like a world-class rally co-driver, through July & August the FANG+ Index corrected over -13% before reversing on cue, however after just 3-weeks the picture has clearly changed with the index retracing over half of the decline and It's now only 5.7% below July’s all-time high. The Bears might be the most vocal but they’ve been losing the arm wrestle with the more muted Bulls all year. With central banks looking more and more like they’ve reached the pinnacle of their rate hiking cycle it's becoming increasingly easy to comprehend the rate-sensitive sector rallying to an all-time high into Christmas.
US stocks delivered a mixed performance overnight with the S&P500 closing down -0.16% with the Financials -0.4% and Real Estate Sectors -0.75% offsetting gains in tech +0.37% and Consumer Discretionary +0.5%, again! The NASDAQ eked out a small gain registering its 5th consecutive positive day but it still endured its worst month in 2023 falling over -2.1%. New inflation data, core personal consumption expenditure (PCE), came in as expected allowing yields to edge lower which helped the likes of tech on the day – volatility is set to rise in the coming days with nonfarm payrolls due tonight and lower liquidity ahead of Labor Day.
US stocks rallied for the 4th straight session overnight as economic data continued to signal that the Fed is approaching the end of its current hiking cycle. The S&P500 closed above 4500 while the NASDAQ finds itself less than 3% below its 2023 high, at MM we are still targeting a break of 16,000 in the coming weeks/months by the NASDAQ which is no longer a big call as Treasury yields edge lower with investors taking a “bad news is good” approach embracing that a slowing economy will lead to a more dovish Fed.
US indices rallied overnight delivering their best performance since June as bond yields retreated with economic data pointing to an end in the Feds tightening cycle. Almost 90% of the S&P500 closed higher led by the “tech mega-caps” as US 2-year treasury yields sank back below 4.9%. US job openings fell by more than expected to 8.83mn, another new 2-year low while consumer confidence fell amid a souring view towards jobs.
The ASX200 rallied +0.6% on Monday despite an average day on the reporting front which saw Fortescue (FMG) -5.1% and NEXTDC (NXT) -2.6% both fall after delivering their earnings numbers/forward guidance. However, on the day there were some very influential names in the winner's enclosure such as CSL Ltd (CSL) +1.7%, BHP Group (BHP) +1.2%, and Commonwealth Bank (CBA) +1.2% which when combined with over 60% of the main board advancing was enough to send the index higher.
Fed Chair Jerome Powell made it abundantly clear in his speech from Jackson Hole that the central bank would keep tightening if required to bring inflation back to its 2% target - its currently sitting at 3.2% after peaking above 9% in June 2022. As Powell reiterated from Wyoming “It’s the Fed’s job to bring inflation down to our 2% goal and we will do so”. Obviously, no mention was made about how/why the genie had escaped the lamp in the first place but we must acknowledge they have performed a solid job of reining it back in over the last ~18 months. Other comments while fairly hawkish were no surprise to MM:
Thursday again saw company earnings/forecasts dominate proceedings with 3 stocks falling between 10 & 12% while the best 3 performers averaged a gain of just over 7%. Unfortunately, It was a reporting day to forget for MM with 3 of our positions in the Flagship Growth Portfolio finding themselves in the proverbial naughty corner. The trend of the last 12-18 months is being magnified to almost extreme levels with plenty of stocks making fresh multi-year lows while a number of winners are nudging all-time highs. We are considering carefully a couple of our standout underperformers as we contemplate whether we should be adding or cutting i.e. will the weak simply keep getting weaker?
At MM we are not always contrarian investors but when we see Fund Managers have become the most bullish in 18 months just as stocks start to wobble in August our initial thought is should we start to skew portfolios more defensively? Funds managers are becoming increasingly optimistic around the US avoiding a recession with 31% of managers polled in the August survey now expecting no recession in 2024, up from 19% in July and 14% in June.
The ASX200 edged higher on Tuesday as reporting season dominated local stocks although attention is slowly moving towards Jackson Hole where we hope to get a read into the current mindset of central bankers. While we don’t expect any forward guidance from Powell and Lagarde, they won’t be telling us when/what the next move will be for interest rates, there are likely to be clues as to their current feelings, a common occurrence during their closely followed speeches.
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