Last week saw another admirable attempt by stocks to rally quickly fade away as investors remembered the looming Fed rate hike on the 2nd of November. On Thursday night US stocks roared higher even as the CPI Inflation print came in hotter than expected but after a report on Friday showed that inflation expectations over the year ahead had risen for the 1st time in 7-months it was one step too far for the bulls to fight the ingrained downtrend and the Dow proceeded to tumble over 400-points, surrendering almost 50% of the previous day’s rally in the process.
The ASX200 tried to rally yesterday but nerves ahead of the pending US CPI crept in after midday and the market surrendered its earlier 40-point advance. There were a couple of fascinating moves within the Resources Sector which could just be the start of some meaningful changes to some entrenched trends of 2022, it smells like “the game is afoot”:
The ASX200 managed to ignore overnight wobbles on Wall Street to close marginally higher on Wednesday courtesy of a stellar session for the banks following an extremely bullish interpretation of the Bank of Queensland’s (BOQ) FY22 result – cash earnings were actually ~1% below consensus but the net interest margin was 2.5% above expectations, costs were lower while the top line increased, the board talked a solid game over the medium-term and as we’ve been discussing over recent weeks there appeared few people left to sell after the regional banks already corrected 35% over the last year, while the...
A week ago the RBA demonstrated some admirable independence by hiking interest rates by a moderate +0.25%, ignoring hawkish rhetoric from other major central banks in the process, it was enough to send local 10-year yields down almost 0.5% to 3.6% and stocks to their best 2-day rally in 2-years. However just one week later the 10’s are back above 4% and the ASX200 has already surrendered 44% of its gains, in our opinion the latter is still a good performance when we consider US stocks are plumbing fresh 2022 lows but the markets “look & feel” is certainly not bullish yet.
The ASX200 struggled yesterday following a poor night on Wall Street coupled with the S&P500 futures pointing to a very shaky start to the week for US stocks, the local index finally closed down -1.4% with over 90% of stocks closing in the red. As expected the growth stocks bore the brunt of the selling following the strong US Employment data on Friday night as they continue to dance to the bond yields tune i.e. rising bond yields continue to weigh on stocks and in particular the likes of tech.
Please excuse the last few month’s fascination with bonds but last week painted a pretty conclusive picture of how bond yields continue to dictate the price of risk assets and in particular stocks.
The ASX200 had a quiet Thursday, especially when compared to the previous two sessions, the index closed up less than 2-points with losers actually slightly outnumbering the winners. Another strong performance by the Energy Sector managed to edge the index higher but outside of the likes of Whitehaven Coal (WHC) and Woodside Energy (WDS) it was a relatively uneventful trading day which felt at its most comfortable trading basically unchanged – no great surprise after already rallying +6.5% from Monday’s intra-day low.
The ASX200 enjoyed another major “risk on” session on Wednesday, we even saw weakness in the US futures ignored throughout our day session as small intra-day dips were bought before they hardly started – no great surprise to MM when we consider how bearish investors & fund managers had become. Readers should remember that last month’s Bank of Americas Fund Managers Survey showed Fund Managers were holding their lowest ever allocation to global equities, or in other words, as we’ve been pointing out who will be left to sell. However, we caution subscribers around becoming too bullish into strength:
The RBA demonstrated some admirable independence yesterday as it hiked interest rates by a moderate 0.25% ignoring hawkish rhetoric from other major central banks in the process, a great call in our opinion! With a large proportion of Australian mortgages going to be linked to the Official Cash Rate by the end of next year there’s undoubtedly going to be a significant headwind for the Australian consumer in the not too distant future, we believe this lag effect is likely to have played a significant role in the decision from Philip Lowe et al.
Stocks entered October in the same vein as the departed September i.e. weak and nervous. On Friday night global stocks fell to a 2-year low on growing concerns that hawkish central banks will plunge the world into a recession which by definition will lead to painful earnings contraction for the majority of listed companies. Today at 2.30pm the RBA is expected to hike rates another 0.5% even if they have been considering a more moderate 0.25%, MM believes it’s unlikely they will have the individual fortitude to buck the global trend and ease off on their recent hiking...
The ASX200 tried to rally yesterday but nerves ahead of the pending US CPI crept in after midday and the market surrendered its earlier 40-point advance. There were a couple of fascinating moves within the Resources Sector which could just be the start of some meaningful changes to some entrenched trends of 2022, it smells like “the game is afoot”:
The ASX200 managed to ignore overnight wobbles on Wall Street to close marginally higher on Wednesday courtesy of a stellar session for the banks following an extremely bullish interpretation of the Bank of Queensland’s (BOQ) FY22 result – cash earnings were actually ~1% below consensus but the net interest margin was 2.5% above expectations, costs were lower while the top line increased, the board talked a solid game over the medium-term and as we’ve been discussing over recent weeks there appeared few people left to sell after the regional banks already corrected 35% over the last year, while the...
A week ago the RBA demonstrated some admirable independence by hiking interest rates by a moderate +0.25%, ignoring hawkish rhetoric from other major central banks in the process, it was enough to send local 10-year yields down almost 0.5% to 3.6% and stocks to their best 2-day rally in 2-years. However just one week later the 10’s are back above 4% and the ASX200 has already surrendered 44% of its gains, in our opinion the latter is still a good performance when we consider US stocks are plumbing fresh 2022 lows but the markets “look & feel” is certainly not bullish yet.
The ASX200 struggled yesterday following a poor night on Wall Street coupled with the S&P500 futures pointing to a very shaky start to the week for US stocks, the local index finally closed down -1.4% with over 90% of stocks closing in the red. As expected the growth stocks bore the brunt of the selling following the strong US Employment data on Friday night as they continue to dance to the bond yields tune i.e. rising bond yields continue to weigh on stocks and in particular the likes of tech.
Please excuse the last few month’s fascination with bonds but last week painted a pretty conclusive picture of how bond yields continue to dictate the price of risk assets and in particular stocks.
The ASX200 had a quiet Thursday, especially when compared to the previous two sessions, the index closed up less than 2-points with losers actually slightly outnumbering the winners. Another strong performance by the Energy Sector managed to edge the index higher but outside of the likes of Whitehaven Coal (WHC) and Woodside Energy (WDS) it was a relatively uneventful trading day which felt at its most comfortable trading basically unchanged – no great surprise after already rallying +6.5% from Monday’s intra-day low.
The ASX200 enjoyed another major “risk on” session on Wednesday, we even saw weakness in the US futures ignored throughout our day session as small intra-day dips were bought before they hardly started – no great surprise to MM when we consider how bearish investors & fund managers had become. Readers should remember that last month’s Bank of Americas Fund Managers Survey showed Fund Managers were holding their lowest ever allocation to global equities, or in other words, as we’ve been pointing out who will be left to sell. However, we caution subscribers around becoming too bullish into strength:
The RBA demonstrated some admirable independence yesterday as it hiked interest rates by a moderate 0.25% ignoring hawkish rhetoric from other major central banks in the process, a great call in our opinion! With a large proportion of Australian mortgages going to be linked to the Official Cash Rate by the end of next year there’s undoubtedly going to be a significant headwind for the Australian consumer in the not too distant future, we believe this lag effect is likely to have played a significant role in the decision from Philip Lowe et al.
Stocks entered October in the same vein as the departed September i.e. weak and nervous. On Friday night global stocks fell to a 2-year low on growing concerns that hawkish central banks will plunge the world into a recession which by definition will lead to painful earnings contraction for the majority of listed companies. Today at 2.30pm the RBA is expected to hike rates another 0.5% even if they have been considering a more moderate 0.25%, MM believes it’s unlikely they will have the individual fortitude to buck the global trend and ease off on their recent hiking...
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
Verication email sent.
Check your email for an email from [email protected]
Subject: Your OTP for Account Access
This email will have a code you can use as your One Time Password for instant access
!
Invalid One Time Password
Please check you entered the correct info, please also note there is a 10minute time limit on the One Time Passcode
To reset your password, enter your email address
A link to create a new password will be sent to the email address you have registered to your account.
Market Matters members receive daily market reports, real-time trade alerts, full access to 5 portfolios and dynamic company data.
Choose how you'd like to proceed:
We have a range of membership options to suit your needs and budget, why not join today and get unlimited access to the premium Market Matters service.
