The ASX200 was sold off over 1% yesterday in classic “two steps forward – one step back” fashion i.e. after basically rallying from 7100 to 7300 in just 2-days we’re back at 7200, the middle of the last 12-months trading range. The banks weighed on the index on Tuesday with the “Big Four” falling an average of 2% while the Tech Sector was back under pressure falling -1.9% however losses were fairly broad-based with 65% of the main board declining as “risk off” seems to follow “risk on” as fast as night follows day!
The ASX200 rallied strongly on Monday delivering an emphatic “risk on” session which saw 85% of stocks advance while only the Utilities Sector closed down on the day, the message from investors was loud and clear – “Goodbye & good riddance to April + May!” As we’ve discussed through recent reports bond yields feel like they’ve topped out for now hence under the hood sector rotation is underway as portfolios that are largely positioned for surging inflation have their hawkish skew at least tempered. We believe yesterday’s relative performance moves across the market groups / sectors will largely follow through, at least short-term:
Over recent weeks MM have repeatedly remarked about how bearish investors both feel and are positioned with a number of measures sitting at decade extremes, not a scenario that usually lasts particularly long before we experience a squeeze of the complacent crowded position. After 7 consecutive weeks of falls, the S&P500 rallied +6.6% last week with sellers appearing to exhaust themselves as we saw hints of some Fed flexibility over the coming months. The data in our opinion while mixed definitely challenged many analysts’ views that we are on an inevitable path of higher rates followed by a subsequent recession. MM saw a few pockets of clear optimism last week:
The ASX200 experienced a tough Thursday falling -0.7% as the previous sessions selling in the futures morphed into a 2-day affair, ironically under the hood it was a clear “risk on” session as we saw weakness in the leading supermarkets while the Tech Sector rallied over 1%. Unfortunately it now appears that the semblance of strength in our growth stocks will need another catalyst after Canadian suitor Telus pulled its $1.2bn bid after just a few hours, were used to takeover bids failing but this is getting crazy, only a few weeks ago a similar thing happened with CVC’s bid for Brambles (BXB). Interestingly we saw 6.4mn shares change hands...
The ASX200 eked out a reasonable +0.4% advance yesterday although unfortunately the gains were halved in the match courtesy of some aggressive selling in the SPI Futures – clearly the short-term money had little faith that the US market could recover from the negative sentiment delivered by Snap Inc’s (SNAP US) ~40% plunge on Tuesday night. The local rally on Wednesday was again very stock / sector specific with the banks, energy and gold stocks looking good while tech was again clobbered. Same trend, different day.
The ASX200 drifted lower yesterday afternoon largely in sympathy with weak US futures and regional equity markets but overall it was another fairly lacklustre day considering yet another gaffe by Joe Biden towards Taiwan and the severe downgrade by Snapchat (SNAP US) which saw the stock plunge over 30% in late US trade. The local market hasn’t moved in over 12-months hence it makes little sense to get too bearish / bullish around current levels but we still think stocks are starting to absorb bad news in a more constructive fashion and the markets internals are improving, let’s hope we’re not looking at things through rose coloured glasses!
The ASX200 closed mildly higher yesterday with the election already taking a backseat to global economic news, on Monday stocks embraced the news into the weekend that China plans to reinvigorate its economic growth with over $US5 Trillion of stimulus after the “COVID Zero” policy has sent many industries into a lengthy slumber. The world’s 2nd largest economy is now looking to shift to a productivity-led economy from an investment led growth model that has underpinned the country for around 30-years - more on this later.
The polls finally got one right, “ScoMo’s” popularity issues plus a backlash against their climate control policies condemned the Liberal Party to a crushing defeat on Saturday although interestingly the Labor Party also suffered a drop in its primary vote as the Independents steamrolled to victory in a number of key seats. As we’ve said previously MM has no political bias and we wish the new Prime Minister elect all the best over the 3-years ahead, especially with the tricky economic backdrop looming on the horizon specifically a potential recession as central banks hike rates to fight inflation.
The ASX200 was clobbered -1.65% yesterday following savage declines on Wall Street, only the healthcare & gold names caught any semblance of a bid while consumer stocks followed their US peers sharply lower around concerns of rising wages / operating costs. Equities are continuing to adjust to higher inflation and interest rates but we believe it’s now predominantly fears of a potential recession on the horizon that’s become investors’ main focus, as we approach the mid-point of 2022 MM feels we probably need a sniff of slowing inflation before markets can find a meaningful bottom.
The ASX200 enjoyed a strong “risk-on” session on Wednesday which resulted in a gain of 1% fuelled by over 70% of the main board advancing, gains were led by the recently underperforming Resources, Consumer Discretionary and IT Sectors while selling was noticeable in some of the traditionally more defensive names – a day early after last night! The index has been range-bound between 6750 and 7650 for almost 15-months and yesterday we closed basically exactly in the middle of the range, whatever technical methods some subscribers may prefer it’s hard not to have a neutral bias towards the underlying index whereas beneath the hood the story has been different on the stock and sector level due to a number of major macro events.
The ASX200 rallied strongly on Monday delivering an emphatic “risk on” session which saw 85% of stocks advance while only the Utilities Sector closed down on the day, the message from investors was loud and clear – “Goodbye & good riddance to April + May!” As we’ve discussed through recent reports bond yields feel like they’ve topped out for now hence under the hood sector rotation is underway as portfolios that are largely positioned for surging inflation have their hawkish skew at least tempered. We believe yesterday’s relative performance moves across the market groups / sectors will largely follow through, at least short-term:
Over recent weeks MM have repeatedly remarked about how bearish investors both feel and are positioned with a number of measures sitting at decade extremes, not a scenario that usually lasts particularly long before we experience a squeeze of the complacent crowded position. After 7 consecutive weeks of falls, the S&P500 rallied +6.6% last week with sellers appearing to exhaust themselves as we saw hints of some Fed flexibility over the coming months. The data in our opinion while mixed definitely challenged many analysts’ views that we are on an inevitable path of higher rates followed by a subsequent recession. MM saw a few pockets of clear optimism last week:
The ASX200 experienced a tough Thursday falling -0.7% as the previous sessions selling in the futures morphed into a 2-day affair, ironically under the hood it was a clear “risk on” session as we saw weakness in the leading supermarkets while the Tech Sector rallied over 1%. Unfortunately it now appears that the semblance of strength in our growth stocks will need another catalyst after Canadian suitor Telus pulled its $1.2bn bid after just a few hours, were used to takeover bids failing but this is getting crazy, only a few weeks ago a similar thing happened with CVC’s bid for Brambles (BXB). Interestingly we saw 6.4mn shares change hands...
The ASX200 eked out a reasonable +0.4% advance yesterday although unfortunately the gains were halved in the match courtesy of some aggressive selling in the SPI Futures – clearly the short-term money had little faith that the US market could recover from the negative sentiment delivered by Snap Inc’s (SNAP US) ~40% plunge on Tuesday night. The local rally on Wednesday was again very stock / sector specific with the banks, energy and gold stocks looking good while tech was again clobbered. Same trend, different day.
The ASX200 drifted lower yesterday afternoon largely in sympathy with weak US futures and regional equity markets but overall it was another fairly lacklustre day considering yet another gaffe by Joe Biden towards Taiwan and the severe downgrade by Snapchat (SNAP US) which saw the stock plunge over 30% in late US trade. The local market hasn’t moved in over 12-months hence it makes little sense to get too bearish / bullish around current levels but we still think stocks are starting to absorb bad news in a more constructive fashion and the markets internals are improving, let’s hope we’re not looking at things through rose coloured glasses!
The ASX200 closed mildly higher yesterday with the election already taking a backseat to global economic news, on Monday stocks embraced the news into the weekend that China plans to reinvigorate its economic growth with over $US5 Trillion of stimulus after the “COVID Zero” policy has sent many industries into a lengthy slumber. The world’s 2nd largest economy is now looking to shift to a productivity-led economy from an investment led growth model that has underpinned the country for around 30-years - more on this later.
The polls finally got one right, “ScoMo’s” popularity issues plus a backlash against their climate control policies condemned the Liberal Party to a crushing defeat on Saturday although interestingly the Labor Party also suffered a drop in its primary vote as the Independents steamrolled to victory in a number of key seats. As we’ve said previously MM has no political bias and we wish the new Prime Minister elect all the best over the 3-years ahead, especially with the tricky economic backdrop looming on the horizon specifically a potential recession as central banks hike rates to fight inflation.
The ASX200 was clobbered -1.65% yesterday following savage declines on Wall Street, only the healthcare & gold names caught any semblance of a bid while consumer stocks followed their US peers sharply lower around concerns of rising wages / operating costs. Equities are continuing to adjust to higher inflation and interest rates but we believe it’s now predominantly fears of a potential recession on the horizon that’s become investors’ main focus, as we approach the mid-point of 2022 MM feels we probably need a sniff of slowing inflation before markets can find a meaningful bottom.
The ASX200 enjoyed a strong “risk-on” session on Wednesday which resulted in a gain of 1% fuelled by over 70% of the main board advancing, gains were led by the recently underperforming Resources, Consumer Discretionary and IT Sectors while selling was noticeable in some of the traditionally more defensive names – a day early after last night! The index has been range-bound between 6750 and 7650 for almost 15-months and yesterday we closed basically exactly in the middle of the range, whatever technical methods some subscribers may prefer it’s hard not to have a neutral bias towards the underlying index whereas beneath the hood the story has been different on the stock and sector level due to a number of major macro events.
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