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.
For most of this year, equities have danced to the bond yield tune, not surprising when we’ve seen such dramatic appreciations but the last few days have seen a number of investors/sectors switch their focus to China, and the $US. Obviously, at this stage, it may be no more than an old-fashioned intermission but MM is looking for the next chapter for stocks to be triggered by a softening $US and bond yields, perhaps the thought of China forgoing its Covid Zero Policy is the catalyst for investors to refocus their attention into Christmas.
The ASX200 promised so much more than it finally delivered on Monday although it still closed up +0.6%, well above the psychological 6900 area. Both the US S&P500 Futures and local index gyrated around on hopes and fears that China would abandon its damaging Covid Zero policy sooner rather than later. On Friday hope that they were about to reopen their economy sent stocks, and especially resources, soaring higher but over the weekend comments from Beijing made the optimism appear premature creating a more sombre backdrop for equities.
Investors were fixated on central banks for most of last week as we saw the RBA, Fed, and BOE all hike interest rates pretty much in line with expectations but on Friday just when people were considering their weekend markets appeared to turn the page to another extremely important chapter:
Thursday saw the ASX200 get clobbered by the Feds sledgehammer, the index finally closed down -1.8% even after bouncing over 40-points from its intra-day low. The selling was broad-based with almost 90% of the market closing in negative territory as the recent buyers retreated into the shadows following the net hawkish rhetoric from Jerome Powell. However, we believe investors shouldn’t be too alarmed, as we touched on yesterday weakness is common in the 1st half of November.
Wednesday saw the ASX200 manage to shrug off weakness across US indices and instead focus on a healthy Asian region, it’s been a while since local stocks went looking for good news but two consecutive 0.25% rate hikes by the RBA when many expected/feared 0.5% moves appears to have been just the required tonic to awaken the bulls. Admittedly the market felt tired yesterday morning as it tested the psychological 7000 level and we shouldn’t disregard how far it has rallied in just one month:
The RBA raised interest rates to a nine-year high yesterday but the controlled 0.25% move was, as MM anticipate, enough to drive equities higher. As we’ve alluded to over the last month Philip Lowe et al appear keen to adopt a more cautious stance as signs emerge that the Australian consumer is coming under increasing pressure e.g. higher rates are really starting to weigh on that Australian sacred cow, housing prices. We continue to believe the rhetoric out of the RBA is slowly becoming more dovish:
The ASX200 enjoyed a strong end to October rallying over 1% following in the footsteps of Wall Street on Friday night – the ASX200 ended the month up +6% as we now head towards the seasonally strongest period of the year. Outside of the Resources/Energy Sectors losers were fairly thin on the ground as only 20% of the main board declined on the day - the RBA’s rate decision today didn’t appear to unnerve too many investors i.e. a controlled rate rise is “old news”.
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.
For most of this year, equities have danced to the bond yield tune, not surprising when we’ve seen such dramatic appreciations but the last few days have seen a number of investors/sectors switch their focus to China, and the $US. Obviously, at this stage, it may be no more than an old-fashioned intermission but MM is looking for the next chapter for stocks to be triggered by a softening $US and bond yields, perhaps the thought of China forgoing its Covid Zero Policy is the catalyst for investors to refocus their attention into Christmas.
The ASX200 promised so much more than it finally delivered on Monday although it still closed up +0.6%, well above the psychological 6900 area. Both the US S&P500 Futures and local index gyrated around on hopes and fears that China would abandon its damaging Covid Zero policy sooner rather than later. On Friday hope that they were about to reopen their economy sent stocks, and especially resources, soaring higher but over the weekend comments from Beijing made the optimism appear premature creating a more sombre backdrop for equities.
Investors were fixated on central banks for most of last week as we saw the RBA, Fed, and BOE all hike interest rates pretty much in line with expectations but on Friday just when people were considering their weekend markets appeared to turn the page to another extremely important chapter:
Thursday saw the ASX200 get clobbered by the Feds sledgehammer, the index finally closed down -1.8% even after bouncing over 40-points from its intra-day low. The selling was broad-based with almost 90% of the market closing in negative territory as the recent buyers retreated into the shadows following the net hawkish rhetoric from Jerome Powell. However, we believe investors shouldn’t be too alarmed, as we touched on yesterday weakness is common in the 1st half of November.
Wednesday saw the ASX200 manage to shrug off weakness across US indices and instead focus on a healthy Asian region, it’s been a while since local stocks went looking for good news but two consecutive 0.25% rate hikes by the RBA when many expected/feared 0.5% moves appears to have been just the required tonic to awaken the bulls. Admittedly the market felt tired yesterday morning as it tested the psychological 7000 level and we shouldn’t disregard how far it has rallied in just one month:
The RBA raised interest rates to a nine-year high yesterday but the controlled 0.25% move was, as MM anticipate, enough to drive equities higher. As we’ve alluded to over the last month Philip Lowe et al appear keen to adopt a more cautious stance as signs emerge that the Australian consumer is coming under increasing pressure e.g. higher rates are really starting to weigh on that Australian sacred cow, housing prices. We continue to believe the rhetoric out of the RBA is slowly becoming more dovish:
The ASX200 enjoyed a strong end to October rallying over 1% following in the footsteps of Wall Street on Friday night – the ASX200 ended the month up +6% as we now head towards the seasonally strongest period of the year. Outside of the Resources/Energy Sectors losers were fairly thin on the ground as only 20% of the main board declined on the day - the RBA’s rate decision today didn’t appear to unnerve too many investors i.e. a controlled rate rise is “old news”.
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