Equities managed to rally in the face of adversity last week after a tough 3-weeks, there was no major bullish news around but even as US short-dated yields continued to test 15-year highs the growth stocks enjoyed a sharp recovery post aggressive falls on Monday and Tuesday to end higher for the week:
Moving back to the markets, the RBA finally injected some optimism into stocks on Thursday after Governor Philip Lowe suggested the market needs to downgrade its projected path for rate hikes into 2023 – remember MM is looking for the Cash Rate to top out ~3% whereas the market was previously looking for a move closer to 4%. Our “best guess” is the RBA will now only hike 0.25% in October & November before giving people a reprieve in December hoping to add to the Christmas cheer i.e. the Official Rate will be 2.85% going into 2023.
The ASX200 was simply whacked on Wednesday closing down almost 100-points on fairly broad based selling which saw over 70% of stocks close in the red, losses were led by the influential resources and financials names e.g. Commonwealth Bank (CBA) -2.1%, National Australia Bank (NAB) -3.1%, BHP Group (BHP) -2.7% and South32 (S32) -2.3%. We dipped our toe back into the market in the afternoon, more on those moves later, on balance we feel that Goldman Sachs might be correct with their latest piece of headline grabbing research “Goldman Strategists warn stocks yet to make “decisive” low”:
As I’m sure most subscribers know the RBA hiked the Official Cash rate another 0.5% yesterday afternoon making it a stratospheric rise to 2.35% from 0.1% in less than 6-months. More are now likely according to governor Philip Lowe as they attempt to quell inflation providing the local economy with a great platform to emerge stronger over the future years:
On the eve of another likely 4th consecutive 0.5% interest rate hike by the RBA, the ASX200 managed to grind higher on a relatively uneventful day considering the last few weeks. The broad-based market was fairly evenly balanced but a +4% rally by the Energy Sector ably supported by a +2% advance across the resources stocks was enough to see the market close in positive territory – the main consistent on the sector level through 2022 has been the strength in the energy stocks.
Equities have really struggled since the short squeeze/optimism fuelled 2-month rally that ran out of momentum in mid-August, in just 3-weeks the US S&P500 has fallen by -9.7%. It’s very easy to blame Jerome Powell’s hawkish rhetoric from Jackson hole for the decline but stocks were already slipping before he spoke and they’ve extended the declines afterwards with the Resources Sector compounding local losses following Chinas lockdown of Chengdu, another drastic attempt by Beijing to achieve Covid-Zero that feels capable of spreading to other cities. It’s very important that subscribers...
The ASX200 has kicked off September in a similar tone to the back-end of August, yesterday’s 141-point drop may have felt particularly aggressive to some observers but we shouldn’t lose sight of the significant influence of BHP trading ex-dividend, it was effectively 33% of the whole markets decline! However, the broad-based selling which resulted in less than 10% of the main board managing to close up on the day would have delivered some definite Spring cheer to the bears. Globally we saw stocks and bonds (rates higher) extend their recent slide as China lockdowns amplified the market’s worries post Jackson Hole.
The ASX200 said goodbye to August with another choppy session around the 7000 level, last month may have seen an attempt to break both under 6900 and above 7100 but come the 31st more than half of the month’s action unfolded close to the psychological 7000 area. Under the hood, it was a very different story at times as stock/sector rotation remains the main game in town after an interesting reporting season that saw more beats than misses but an underlying cautious tone towards...
Over the last 2-weeks on Ausbiz our Research Lead Shawn has mentioned how cryptos and especially Bitcoin can be a leading indicator for stocks, the chart below illustrates perfectly how in November 2021 Bitcoin topped out about 2-weeks earlier than the US Tech Sector, they subsequently rolled lower in tandem as “risk off” has become the new norm, the current read through for liquidity and risk assets is one of clear short-term caution:
A few words from Jerome Powell was enough to whack the ASX200 yesterday with only 2% of stocks managing to close up on Monday but the -1.95% sell-off still felt restrained compared to US indices - although we did post fresh 4-week lows on the day. There was no particular surprise with yesterday’s reaction to Jerome Powell’s comments from Jackson Hole and subsequent aggressive sell-off across US stocks, the interest rates sensitive local Tech Sector fell -4.4% to be worst on ground although there was nowhere...
Moving back to the markets, the RBA finally injected some optimism into stocks on Thursday after Governor Philip Lowe suggested the market needs to downgrade its projected path for rate hikes into 2023 – remember MM is looking for the Cash Rate to top out ~3% whereas the market was previously looking for a move closer to 4%. Our “best guess” is the RBA will now only hike 0.25% in October & November before giving people a reprieve in December hoping to add to the Christmas cheer i.e. the Official Rate will be 2.85% going into 2023.
The ASX200 was simply whacked on Wednesday closing down almost 100-points on fairly broad based selling which saw over 70% of stocks close in the red, losses were led by the influential resources and financials names e.g. Commonwealth Bank (CBA) -2.1%, National Australia Bank (NAB) -3.1%, BHP Group (BHP) -2.7% and South32 (S32) -2.3%. We dipped our toe back into the market in the afternoon, more on those moves later, on balance we feel that Goldman Sachs might be correct with their latest piece of headline grabbing research “Goldman Strategists warn stocks yet to make “decisive” low”:
As I’m sure most subscribers know the RBA hiked the Official Cash rate another 0.5% yesterday afternoon making it a stratospheric rise to 2.35% from 0.1% in less than 6-months. More are now likely according to governor Philip Lowe as they attempt to quell inflation providing the local economy with a great platform to emerge stronger over the future years:
On the eve of another likely 4th consecutive 0.5% interest rate hike by the RBA, the ASX200 managed to grind higher on a relatively uneventful day considering the last few weeks. The broad-based market was fairly evenly balanced but a +4% rally by the Energy Sector ably supported by a +2% advance across the resources stocks was enough to see the market close in positive territory – the main consistent on the sector level through 2022 has been the strength in the energy stocks.
Equities have really struggled since the short squeeze/optimism fuelled 2-month rally that ran out of momentum in mid-August, in just 3-weeks the US S&P500 has fallen by -9.7%. It’s very easy to blame Jerome Powell’s hawkish rhetoric from Jackson hole for the decline but stocks were already slipping before he spoke and they’ve extended the declines afterwards with the Resources Sector compounding local losses following Chinas lockdown of Chengdu, another drastic attempt by Beijing to achieve Covid-Zero that feels capable of spreading to other cities. It’s very important that subscribers...
The ASX200 has kicked off September in a similar tone to the back-end of August, yesterday’s 141-point drop may have felt particularly aggressive to some observers but we shouldn’t lose sight of the significant influence of BHP trading ex-dividend, it was effectively 33% of the whole markets decline! However, the broad-based selling which resulted in less than 10% of the main board managing to close up on the day would have delivered some definite Spring cheer to the bears. Globally we saw stocks and bonds (rates higher) extend their recent slide as China lockdowns amplified the market’s worries post Jackson Hole.
The ASX200 said goodbye to August with another choppy session around the 7000 level, last month may have seen an attempt to break both under 6900 and above 7100 but come the 31st more than half of the month’s action unfolded close to the psychological 7000 area. Under the hood, it was a very different story at times as stock/sector rotation remains the main game in town after an interesting reporting season that saw more beats than misses but an underlying cautious tone towards...
Over the last 2-weeks on Ausbiz our Research Lead Shawn has mentioned how cryptos and especially Bitcoin can be a leading indicator for stocks, the chart below illustrates perfectly how in November 2021 Bitcoin topped out about 2-weeks earlier than the US Tech Sector, they subsequently rolled lower in tandem as “risk off” has become the new norm, the current read through for liquidity and risk assets is one of clear short-term caution:
A few words from Jerome Powell was enough to whack the ASX200 yesterday with only 2% of stocks managing to close up on Monday but the -1.95% sell-off still felt restrained compared to US indices - although we did post fresh 4-week lows on the day. There was no particular surprise with yesterday’s reaction to Jerome Powell’s comments from Jackson Hole and subsequent aggressive sell-off across US stocks, the interest rates sensitive local Tech Sector fell -4.4% to be worst on ground although there was nowhere...
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