This morning we’ve evolved the title of the last two weeks Macro Report from “Here comes the bounce – 1 & 2” to one of two main catalysts which MM can see driving such a bounce although we will touch on both. Firstly, the influential Banking Sector which has been under pressure all year in the US, whereas locally the weakness has only noticeably unfolded from April, on Friday the US KBW Bank Index surged +5.8% following a strong 2nd quarter result from Citigroup which sent its stock up +13% plus Wells Fargo rallied +6.2% after delivering a lift in net interest income. Importantly at least for the next few months we now believe the...
The ASX200 shrugged off red hot US inflation on Thursday to eke out a solid +0.4% gain with Tech stocks finally leading the line even as bond yields rallied and pundits started weighing up whether the Fed would follow the Bank of Canada and hike interest rates by 1% come their July 28th meeting - it feels almost ironic that markets are convinced interest rates will accelerate higher just as a 3rd wave of Covid casts another dark shadow over the economy. Bond markets are effectively telling us they have very little faith that the Fed can successfully & orderly navigate the current 40-year high inflation rate:
The ASX200 managed to rally +0.2% yesterday as strength across the broad market was enough to offset selling in the Resources Sector following the significant declines from the likes of copper and crude oil on Tuesday night. The market actually closed on its highs after reversing early losses as some bargain hunting entered previously weak pockets of the market although investors will need convincing that a recession isn’t imminent before we’re likely to enjoy some meaningful follow-through.
The ASX200 drifted steadily lower throughout Tuesday to close up just 4-points after being almost 50-points to the good earlier in the day, fortunately for the index the banks were firm on yet another day when investors showed zero interest in buying strength. Ultimately less than 35% of stocks closed up for the session which saw further weakness across the Resources Sector as recession fears continue to gather momentum, a number of major miners made fresh multi-month lows including the 5 below while others look destined to follow their lead over the coming days:
The ASX200 fell over 1% yesterday as increasing Covid cases across the globe started to weigh on an already fragile market – it already feels like ages ago that everybody was trying to buy into the re-opening trade! Over 80% of stocks on the main board fell on Monday but although there was broad based weakness it was on relatively low volume suggesting buyers simply took a step backwards as opposed to the sellers returning in force. Rising economic fears weighed on the miners as would be expected with a number of prominent names very close to making fresh 2022 lows e.g. OZ Minerals (OZL), BHP Group (BHP) and South32 (S32).
The title for Monday’s report over the last fortnight has been “Here comes the bounce – 1 & 2” and the ASX200 has delivered on the index level albeit in a slow and choppy manner with major stock/sector rotation unfolded beneath the hood - investors are swinging their attention between focusing their fears on either rising inflation/bond yields or an imminent recession. On Friday night strong US employment data saw an expected rally in bond yields which initially sent US stocks lower but it was encouraging for the short-term bulls like MM that they ground back to close unchanged setting the stage for a firm open by local stocks this morning.
The ASX200 rallied +0.8% yesterday on reasonably broad based buying that saw over 60% of the main index rally while importantly there was an absence of any meaningful aggressive selling across any of the 11 sectors. Its early days but stocks are positive for the month following the carnage experienced by equities through June, the market feels well supported at the moment which coincides with the seasonal strength that usually unfolds through July before things historically go quiet into early October. The stock / sector rotation under the hood of the market looks destined to continue for...
Bizarrely it felt like a positive day for the ASX200 on Wednesday even though the index ended the choppy day down -0.5%, most stocks managed to rally but the weakness for the index came from one very specific and influential sector of the market i.e. the heavyweight resources which were hammered following steep declines across commodities markets on Tuesday night as fears of a global recession continued to escalate. MM has been looking for a snap back in the dislocation between bond yields and tech stocks for a few weeks and it finally kicked into play with a vengeance yesterday supporting the index in the process:
The ASX200 managed to rally +0.25% after the RBA raised interest rates 0.5%, right in line with expectations, the cash rate sits at 1.35% with pundits now attempting to 2nd guess what comes next. We are in the midst of the most aggressive tightening cycle in almost 30 years after two consecutive 0.5% hikes and many people are now expecting another to follow in August as local inflation is tipped to edge towards 7% by Christmas:
The ASX200 started its first full week of July on the front foot rallying +1.1% on broad-based buying which saw over 80% of the main board close up on the day. All sectors rallied with only the industrials and utilities advancing less than 0.5%, the underlying strength flowed through from the bond market which has started to question how fast central banks will hike rates as recession fears increase, global economic data is already starting to deteriorate threatening a recession sooner rather than later. On balance, MM believes we will see rate cuts in late 2023 but in today’s uncertain...
The ASX200 shrugged off red hot US inflation on Thursday to eke out a solid +0.4% gain with Tech stocks finally leading the line even as bond yields rallied and pundits started weighing up whether the Fed would follow the Bank of Canada and hike interest rates by 1% come their July 28th meeting - it feels almost ironic that markets are convinced interest rates will accelerate higher just as a 3rd wave of Covid casts another dark shadow over the economy. Bond markets are effectively telling us they have very little faith that the Fed can successfully & orderly navigate the current 40-year high inflation rate:
The ASX200 managed to rally +0.2% yesterday as strength across the broad market was enough to offset selling in the Resources Sector following the significant declines from the likes of copper and crude oil on Tuesday night. The market actually closed on its highs after reversing early losses as some bargain hunting entered previously weak pockets of the market although investors will need convincing that a recession isn’t imminent before we’re likely to enjoy some meaningful follow-through.
The ASX200 drifted steadily lower throughout Tuesday to close up just 4-points after being almost 50-points to the good earlier in the day, fortunately for the index the banks were firm on yet another day when investors showed zero interest in buying strength. Ultimately less than 35% of stocks closed up for the session which saw further weakness across the Resources Sector as recession fears continue to gather momentum, a number of major miners made fresh multi-month lows including the 5 below while others look destined to follow their lead over the coming days:
The ASX200 fell over 1% yesterday as increasing Covid cases across the globe started to weigh on an already fragile market – it already feels like ages ago that everybody was trying to buy into the re-opening trade! Over 80% of stocks on the main board fell on Monday but although there was broad based weakness it was on relatively low volume suggesting buyers simply took a step backwards as opposed to the sellers returning in force. Rising economic fears weighed on the miners as would be expected with a number of prominent names very close to making fresh 2022 lows e.g. OZ Minerals (OZL), BHP Group (BHP) and South32 (S32).
The title for Monday’s report over the last fortnight has been “Here comes the bounce – 1 & 2” and the ASX200 has delivered on the index level albeit in a slow and choppy manner with major stock/sector rotation unfolded beneath the hood - investors are swinging their attention between focusing their fears on either rising inflation/bond yields or an imminent recession. On Friday night strong US employment data saw an expected rally in bond yields which initially sent US stocks lower but it was encouraging for the short-term bulls like MM that they ground back to close unchanged setting the stage for a firm open by local stocks this morning.
The ASX200 rallied +0.8% yesterday on reasonably broad based buying that saw over 60% of the main index rally while importantly there was an absence of any meaningful aggressive selling across any of the 11 sectors. Its early days but stocks are positive for the month following the carnage experienced by equities through June, the market feels well supported at the moment which coincides with the seasonal strength that usually unfolds through July before things historically go quiet into early October. The stock / sector rotation under the hood of the market looks destined to continue for...
Bizarrely it felt like a positive day for the ASX200 on Wednesday even though the index ended the choppy day down -0.5%, most stocks managed to rally but the weakness for the index came from one very specific and influential sector of the market i.e. the heavyweight resources which were hammered following steep declines across commodities markets on Tuesday night as fears of a global recession continued to escalate. MM has been looking for a snap back in the dislocation between bond yields and tech stocks for a few weeks and it finally kicked into play with a vengeance yesterday supporting the index in the process:
The ASX200 managed to rally +0.25% after the RBA raised interest rates 0.5%, right in line with expectations, the cash rate sits at 1.35% with pundits now attempting to 2nd guess what comes next. We are in the midst of the most aggressive tightening cycle in almost 30 years after two consecutive 0.5% hikes and many people are now expecting another to follow in August as local inflation is tipped to edge towards 7% by Christmas:
The ASX200 started its first full week of July on the front foot rallying +1.1% on broad-based buying which saw over 80% of the main board close up on the day. All sectors rallied with only the industrials and utilities advancing less than 0.5%, the underlying strength flowed through from the bond market which has started to question how fast central banks will hike rates as recession fears increase, global economic data is already starting to deteriorate threatening a recession sooner rather than later. On balance, MM believes we will see rate cuts in late 2023 but in today’s uncertain...
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