The last 12 months have thrown a spanner in the works of normal logic when we look at bond yields and leading economic bellwether, Dr. Copper, the hawkish rhetoric from the Fed is the obvious explanation but at some point in time, the usual correlation breakdown is likely to unwind. We shouldn’t forget the Fed got it very wrong when it came to timing interest rate hikes, letting inflation rip in the process, what’s to say they don’t make an equally poor call with the timing of when to back off and let the US economy breathe:
The ASX200 experienced a quiet start to the penultimate week of November which saw winners and losers match each other almost perfectly, the index ultimately slipped -0.2% to add to the consolidation of the market since testing 7200 last week. The ongoing sector rotation continues in a predictable fashion depending on strength/weakness in bond yields and the $US. Yesterday saw the $US kick up almost 1% leading to a very clear group of winners and losers which are likely to be reversed if/when we see the Greenback dip back under 107:
Novembers Bank of America Fund Managers Survey came out last week and it showed a whopping 92% of the respondents are expecting stagflation in 2023, generally a far worse scenario than a recession because any of the common levers used to reduce inflation will damage further the deteriorating growth and employment backdrop.
The ASX200 rallied +0.2% on Thursday with over 70% of the main board advancing, unfortunately, weakness across the influential resources stocks restrained a generally enthusiastic market e.g. Woodside Energy (WDS) -2.2%, BHP Group (BHP) -1.5%, Sandfire Resources (SFR) -3% and South32 (S32) -5.2%. It’s a touch boring but the story remains the same as the index starts to establish a small trading range between 7100 and 7200. On the stock and sector levels, it’s pretty quiet as December approaches fast, perhaps after a tough year so far fund managers...
The ASX200 slipped for a 2nd consecutive day on Tuesday failing to embrace decent gains on Wall Street in the process, the banks were the biggest drag on the index with heavyweight Commonwealth Bank (CBA) dropping -1.8% although the broad market was weaker with almost 60% of the main board closing down on the day. The moves by CBA over the last 48 hours sum up the choppy nature of the current market, it advanced $1.38 on Tuesday before falling $1.90 on Wednesday i.e. it delivered a strong quarterly result on Tuesday but after surging +19.8% since July it simply feels tired on the upside.
We started yesterday’s Morning Report discussing Monday’s market of two halves, and 24 hours later Tuesday’s trading session was a similar affair, just with different stocks in the respective winners & losers enclosure:
The ASX200 slipped -0.2% on Monday after testing our much-flagged 7200 target level in the morning, the simple problem was the broad market was soft with only 30% on the main index managing to close in positive territory. On the sector front, only the Energy & Materials Sectors closed higher while the tech stocks in particular disappointed after a strong performance by the NASDAQ on Friday night although the intra-day sentiment wasn’t helped by US stock Futures drifting lower throughout our day session. As we’ve been saying a bit of late it was yet another day of two halves:
The ASX200 slipped -0.5% on Thursday as a clear break of the 7000 level continued to be one step too far – until this morning! Selling was fairly broad-based yesterday with 65% of the index closing in the red although weakness was noticeable in the influential Resources, IT, and Banking Sectors. However, considering the US market had fallen over 2%, the night before, under the combined weight of inconclusive mid-terms, poor corporate reports, and a tumbling crypto market we felt the performance was ok.
The ASX200 rallied another +0.6% on Wednesday basically closing smack on 7000 resistance but to adopt a corny often used phrase it was another classic game of two halves with well over 30% of the main index still closing in negative territory. Plus there were a few sectors such as Tech and Healthcare that sat on the fence, however as we’ve all seen this year the stocks /sectors could switch relative performance positions in the blink of an eye.
The ASX200 experienced a quiet start to the penultimate week of November which saw winners and losers match each other almost perfectly, the index ultimately slipped -0.2% to add to the consolidation of the market since testing 7200 last week. The ongoing sector rotation continues in a predictable fashion depending on strength/weakness in bond yields and the $US. Yesterday saw the $US kick up almost 1% leading to a very clear group of winners and losers which are likely to be reversed if/when we see the Greenback dip back under 107:
Novembers Bank of America Fund Managers Survey came out last week and it showed a whopping 92% of the respondents are expecting stagflation in 2023, generally a far worse scenario than a recession because any of the common levers used to reduce inflation will damage further the deteriorating growth and employment backdrop.
The ASX200 rallied +0.2% on Thursday with over 70% of the main board advancing, unfortunately, weakness across the influential resources stocks restrained a generally enthusiastic market e.g. Woodside Energy (WDS) -2.2%, BHP Group (BHP) -1.5%, Sandfire Resources (SFR) -3% and South32 (S32) -5.2%. It’s a touch boring but the story remains the same as the index starts to establish a small trading range between 7100 and 7200. On the stock and sector levels, it’s pretty quiet as December approaches fast, perhaps after a tough year so far fund managers...
The ASX200 slipped for a 2nd consecutive day on Tuesday failing to embrace decent gains on Wall Street in the process, the banks were the biggest drag on the index with heavyweight Commonwealth Bank (CBA) dropping -1.8% although the broad market was weaker with almost 60% of the main board closing down on the day. The moves by CBA over the last 48 hours sum up the choppy nature of the current market, it advanced $1.38 on Tuesday before falling $1.90 on Wednesday i.e. it delivered a strong quarterly result on Tuesday but after surging +19.8% since July it simply feels tired on the upside.
We started yesterday’s Morning Report discussing Monday’s market of two halves, and 24 hours later Tuesday’s trading session was a similar affair, just with different stocks in the respective winners & losers enclosure:
The ASX200 slipped -0.2% on Monday after testing our much-flagged 7200 target level in the morning, the simple problem was the broad market was soft with only 30% on the main index managing to close in positive territory. On the sector front, only the Energy & Materials Sectors closed higher while the tech stocks in particular disappointed after a strong performance by the NASDAQ on Friday night although the intra-day sentiment wasn’t helped by US stock Futures drifting lower throughout our day session. As we’ve been saying a bit of late it was yet another day of two halves:
The ASX200 slipped -0.5% on Thursday as a clear break of the 7000 level continued to be one step too far – until this morning! Selling was fairly broad-based yesterday with 65% of the index closing in the red although weakness was noticeable in the influential Resources, IT, and Banking Sectors. However, considering the US market had fallen over 2%, the night before, under the combined weight of inconclusive mid-terms, poor corporate reports, and a tumbling crypto market we felt the performance was ok.
The ASX200 rallied another +0.6% on Wednesday basically closing smack on 7000 resistance but to adopt a corny often used phrase it was another classic game of two halves with well over 30% of the main index still closing in negative territory. Plus there were a few sectors such as Tech and Healthcare that sat on the fence, however as we’ve all seen this year the stocks /sectors could switch relative performance positions in the blink of an eye.
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