Today I turn 40, I’m not normally big into birthdays however they say this one is meaningful, a time for reflection, to focus on what comes next. For me, hopefully, more of the same with a few more camping holidays, a bit more time with the kids, and I also feel like I need some adventures, things that offer a challenge both physically and mentally and that’s going to be a priority over the coming years. For Market Matters and our wider investment management business, there are some really exciting developments about to happen. Our vision for Market Matters has always been to create a great digital advice platform...
Firstly, I hope you all had a great Easter break, a beautiful 4 days in Sydney where the sun was certainly appreciated. The ASX 200 added +0.61% for the shortened week with Gold & Travel-related stocks populating the leader board. We’re now 19 days into the market’s 2nd strongest month of the year with a gain of just 0.32% to speak of. The ‘old world’ is smashing the new with Utilities up 5.44% while the Information Technology sector languishes, down another 4.01% for the period. Bond yields the major influence on respective sector performance however as US quarterly reporting season heats up it’s important to remember MM’s preferred path for the coming period.
Since hitting a high of 7573 on the 5th of April, the ASX200 has drifted lower as it consolidates the gains achieved in the best March since 2009. The patience of the bulls is being tested however in MM’s view it remains just a matter of time before new highs are achieved for local stocks. Bond yields had a rest yesterday which relieved some pressure on sectors that cower at their ongoing advance while the resources & energy stocks continued to enjoy strength in their underlying commodity prices.
The ASX200 disappointingly reversed some early optimism yesterday to close down 0.42% however there was a lack of interest in the market shown through light volumes ahead of the Easter break. Despite this continued consolidation, MM’s view is unchanged into the end of April / early May:
A tepid start to the trading week locally with a small 0.10% gain at the index level courtesy of strength amongst the financial stocks which have enjoyed the onset of higher interest rates, the hope that margin pressure will ease along with some large looming dividends is a hard 1-2 combo to pass up. All the talk this year has been about how hot the Energy & Materials stocks have been and rightly so, however, it’s the boring/defensive sector of Ulilities that has been the quiet achiever. In a little over 3 months, the sector that comprises the likes of APA Group (APA), Origin Energy (ORG) & AGL Energy (AGL) is up over 17%, dramatically outperforming last year’s ‘go-to’ tech sector by more than 35%. As we often say at Market Matters, keep an open mind and 2022 is so far delivering on that call.
Last week saw the ASX200 consolidate its recent rally just below all-time highs despite the growing chorus for the RBA to act sooner rather than later and commence the inevitable interest rate tightening cycle, joining the US & Canada who raised by 0.25% in March and New Zealand who have now pushed through three rate increases taking the official cash rate to 1%. When the RBA cut rates way back in November of 2020 to the emergency setting of just 0.10% they based their decision on economic forecasts. By the end of 2022 they thought unemployment would be 6% and inflation would be 1.5%, as it stands now we have unemployment at 4% and inflation at 3.5%, a long way from these economic assumptions.
The local market endured a bad day at the office yesterday falling -0.6% as we followed the US futures lower through both their day session and again during our day time / their overnight session. Over 70% of the mainboards stocks slid on Thursday but it was again the growth stocks that weighed the most on the ASX with all members closing lower leaving the overall sector down -3.5%, ultimately it was a fairly uninspiring day that saw the SPI Futures close where they were trading at 10am.
The local market fought valiantly on Wednesday to recover from a very shaky start finally closing down exactly -0.5%, although only 31% of the market closed up on the day a strong session across the influential Banking Sector was enough to offset the broad based losses across the tech and resources stocks. The sentiment towards the banks appears to have lifted following yesterday’s RBA comments which strongly implied they would start hiking interest rates sooner rather than later, historically banks improve their margins in a higher rate environment, assuming bad debts remain stable. Our view towards the sector hasn’t changed for months and if MM is correct things should start to get interesting:
Yesterday saw the ASX200 surrender most of the days early gains following the RBA’s interest rate decision and accompanying rhetoric but it still managed to eke out a +0.2% gain as the local index inches ever closer to an all-time high, now only 1.3% away. The Tech Sector followed their US peers higher on Tuesday ending the day up +3.15% with every stock in the main board’s sector closing up on the day – MM is still looking for the growth names to outperform over the coming weeks/months but rotation keeps threatening and failing to follow through.
We’ve started off the first full week of April with a small +0.3% advance courtesy of broad-based gains offsetting a tired looking Banking Sector although the miners and utilities stocks continued to shine as they have through most of 2022 – if the market remains in sync with our roadmap for the year we see no reason to anticipate a significant change in relative sector performance until we do find an inflection point. This ties in with our recent stance towards the local miners:
Firstly, I hope you all had a great Easter break, a beautiful 4 days in Sydney where the sun was certainly appreciated. The ASX 200 added +0.61% for the shortened week with Gold & Travel-related stocks populating the leader board. We’re now 19 days into the market’s 2nd strongest month of the year with a gain of just 0.32% to speak of. The ‘old world’ is smashing the new with Utilities up 5.44% while the Information Technology sector languishes, down another 4.01% for the period. Bond yields the major influence on respective sector performance however as US quarterly reporting season heats up it’s important to remember MM’s preferred path for the coming period.
Since hitting a high of 7573 on the 5th of April, the ASX200 has drifted lower as it consolidates the gains achieved in the best March since 2009. The patience of the bulls is being tested however in MM’s view it remains just a matter of time before new highs are achieved for local stocks. Bond yields had a rest yesterday which relieved some pressure on sectors that cower at their ongoing advance while the resources & energy stocks continued to enjoy strength in their underlying commodity prices.
The ASX200 disappointingly reversed some early optimism yesterday to close down 0.42% however there was a lack of interest in the market shown through light volumes ahead of the Easter break. Despite this continued consolidation, MM’s view is unchanged into the end of April / early May:
A tepid start to the trading week locally with a small 0.10% gain at the index level courtesy of strength amongst the financial stocks which have enjoyed the onset of higher interest rates, the hope that margin pressure will ease along with some large looming dividends is a hard 1-2 combo to pass up. All the talk this year has been about how hot the Energy & Materials stocks have been and rightly so, however, it’s the boring/defensive sector of Ulilities that has been the quiet achiever. In a little over 3 months, the sector that comprises the likes of APA Group (APA), Origin Energy (ORG) & AGL Energy (AGL) is up over 17%, dramatically outperforming last year’s ‘go-to’ tech sector by more than 35%. As we often say at Market Matters, keep an open mind and 2022 is so far delivering on that call.
Last week saw the ASX200 consolidate its recent rally just below all-time highs despite the growing chorus for the RBA to act sooner rather than later and commence the inevitable interest rate tightening cycle, joining the US & Canada who raised by 0.25% in March and New Zealand who have now pushed through three rate increases taking the official cash rate to 1%. When the RBA cut rates way back in November of 2020 to the emergency setting of just 0.10% they based their decision on economic forecasts. By the end of 2022 they thought unemployment would be 6% and inflation would be 1.5%, as it stands now we have unemployment at 4% and inflation at 3.5%, a long way from these economic assumptions.
The local market endured a bad day at the office yesterday falling -0.6% as we followed the US futures lower through both their day session and again during our day time / their overnight session. Over 70% of the mainboards stocks slid on Thursday but it was again the growth stocks that weighed the most on the ASX with all members closing lower leaving the overall sector down -3.5%, ultimately it was a fairly uninspiring day that saw the SPI Futures close where they were trading at 10am.
The local market fought valiantly on Wednesday to recover from a very shaky start finally closing down exactly -0.5%, although only 31% of the market closed up on the day a strong session across the influential Banking Sector was enough to offset the broad based losses across the tech and resources stocks. The sentiment towards the banks appears to have lifted following yesterday’s RBA comments which strongly implied they would start hiking interest rates sooner rather than later, historically banks improve their margins in a higher rate environment, assuming bad debts remain stable. Our view towards the sector hasn’t changed for months and if MM is correct things should start to get interesting:
Yesterday saw the ASX200 surrender most of the days early gains following the RBA’s interest rate decision and accompanying rhetoric but it still managed to eke out a +0.2% gain as the local index inches ever closer to an all-time high, now only 1.3% away. The Tech Sector followed their US peers higher on Tuesday ending the day up +3.15% with every stock in the main board’s sector closing up on the day – MM is still looking for the growth names to outperform over the coming weeks/months but rotation keeps threatening and failing to follow through.
We’ve started off the first full week of April with a small +0.3% advance courtesy of broad-based gains offsetting a tired looking Banking Sector although the miners and utilities stocks continued to shine as they have through most of 2022 – if the market remains in sync with our roadmap for the year we see no reason to anticipate a significant change in relative sector performance until we do find an inflection point. This ties in with our recent stance towards the local miners:
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