As most readers would know last week saw central banks continue to hike interest rates with total disregard for Christmas cheer, the hikes and net hawkish rhetoric weighed on equities making a “Christmas Rally” start to feel like the proverbial pipe dream – any other time of the year and we would say no way but history tells us to never discount a run by stocks into Christmas and the year-end. Some fascinating moves unfolded on the macro level last week with very mixed messages for investors:
The ASX200 struggled again yesterday taking the market into negative territory for the week as weakness crept into the previously strong Resources Sector. The market has felt heavy over the last few weeks but at this stage, we’re still only -2.3% below the market’s recent high, very surmountable if we can regain our mojo after recent moves by central banks...
The ASX200 rallied strongly on Wednesday following the positive lead from the better-than-expected US CPI inflation print, we believe bond yields have peaked for now although the Fed have work to do even if the worst of US inflation may have passed. Stocks/sectors are taking some heart from recent Fed comments and Tuesday’s benign CPI read as we see some reversion to the dominant trends of 2022 start to slowly unfold, yesterday fitted into this story under the hood i.e. banks and resources were mixed while the tech stocks gained some traction.
Stock markets across the region rallied yesterday before last night’s much anticipated US CPI print that confirmed the heat is coming out of US inflation, just like it is in Australia, and the most aggressive tightening of monetary policy in history is working. Overnight, US headline inflation came in at 7.1% for November, down from 7.7% the prior month and below the 7.3% expected by the market. Stripping out the more volatile food and energy, core inflation was 6%, down from 6.3% and below the 6.1% expected. This created some fireworks in bond markets overnight, Treasuries...
The ASX200 slipped another -0.45% on Monday on broad-based selling which saw well over 60% of the main board close down for the day with the resources coming off the boil catching our attention after we trimmed our exposure last week. Elsewhere in what felt like a fairly quiet day with central banks sitting poised to dominate the news some buying crept into the tech space but there have been many false dawns on this front through 2022:
The combination of inflation, interest rates and bond yields have driven equities post-Covid, as global uncertainty escalated through/after the pandemic the RBA and US Federal Reserve cut interest rates to basically zero which propelled risk assets, including stocks, to fresh all-time highs. Unfortunately, the inability of these central banks to take some medicine early on and start slowly raising rates from say late 2020 has seen the inflation genie escape the lamp and the rest is already history i.e. the steepest, most aggressive series of interest rate hikes in history.
The ASX200 fell another -0.7% on Thursday dragged lower by broad-based selling and specific weakness across the influential banks and large-cap miners. A combination of the RBA hiking rates at the same time as growth data has started to soften has weighed on already nervous growth names while the China reopening play has started to lose momentum after pushing our Resources Sector significantly higher over recent weeks.
The ASX200 experienced a tough Wednesday finally closing down -0.85% after a huge sell order hit the SPI futures market after 4 pm, ultimately it doubled the day’s losses in just 10-minutes i.e. before the aggressive MOC Order (market on close) the index had clawed back from being down 70-points to being just 32-points in the red. The market was feeling reasonably constructive into 4 pm but alas big MOC sell orders are often a sign equities have lost their mojo, at least for a while, remember in Wednesday’s Portfolio Report after the RBA’s 8th consecutive....
The phrase “what a difference a day/week etc” makes is often used liberally but 2022 certainly qualifies when it comes to interest rates, yesterday saw the RBA hike the Official Cash Rate for a record 8 consecutive times taking us from an all-time low of 0.1% to a 10 year high above 3%. Australia has seen 2 major extremes in the blink of an eye, it feels like only yesterday when Philip Lowe said that interest rates would stay low until 2024 – he actually started the rhetoric in 2020 and continued it through much of 2021.
The ASX200 rallied another +0.3% on Monday courtesy of China’s reopening shift which propelled resource stocks higher on hopes that the global economy can avoid a deep contraction in 2023, unfortunately, the move caused the market to polarise as bond yields rallied in line with the optimism towards the growth outlook. The move in bonds resulted in over half of the market closing lower but when the heavyweight resources advance strongly the market often ignores the crowd:
The ASX200 struggled again yesterday taking the market into negative territory for the week as weakness crept into the previously strong Resources Sector. The market has felt heavy over the last few weeks but at this stage, we’re still only -2.3% below the market’s recent high, very surmountable if we can regain our mojo after recent moves by central banks...
The ASX200 rallied strongly on Wednesday following the positive lead from the better-than-expected US CPI inflation print, we believe bond yields have peaked for now although the Fed have work to do even if the worst of US inflation may have passed. Stocks/sectors are taking some heart from recent Fed comments and Tuesday’s benign CPI read as we see some reversion to the dominant trends of 2022 start to slowly unfold, yesterday fitted into this story under the hood i.e. banks and resources were mixed while the tech stocks gained some traction.
Stock markets across the region rallied yesterday before last night’s much anticipated US CPI print that confirmed the heat is coming out of US inflation, just like it is in Australia, and the most aggressive tightening of monetary policy in history is working. Overnight, US headline inflation came in at 7.1% for November, down from 7.7% the prior month and below the 7.3% expected by the market. Stripping out the more volatile food and energy, core inflation was 6%, down from 6.3% and below the 6.1% expected. This created some fireworks in bond markets overnight, Treasuries...
The ASX200 slipped another -0.45% on Monday on broad-based selling which saw well over 60% of the main board close down for the day with the resources coming off the boil catching our attention after we trimmed our exposure last week. Elsewhere in what felt like a fairly quiet day with central banks sitting poised to dominate the news some buying crept into the tech space but there have been many false dawns on this front through 2022:
The combination of inflation, interest rates and bond yields have driven equities post-Covid, as global uncertainty escalated through/after the pandemic the RBA and US Federal Reserve cut interest rates to basically zero which propelled risk assets, including stocks, to fresh all-time highs. Unfortunately, the inability of these central banks to take some medicine early on and start slowly raising rates from say late 2020 has seen the inflation genie escape the lamp and the rest is already history i.e. the steepest, most aggressive series of interest rate hikes in history.
The ASX200 fell another -0.7% on Thursday dragged lower by broad-based selling and specific weakness across the influential banks and large-cap miners. A combination of the RBA hiking rates at the same time as growth data has started to soften has weighed on already nervous growth names while the China reopening play has started to lose momentum after pushing our Resources Sector significantly higher over recent weeks.
The ASX200 experienced a tough Wednesday finally closing down -0.85% after a huge sell order hit the SPI futures market after 4 pm, ultimately it doubled the day’s losses in just 10-minutes i.e. before the aggressive MOC Order (market on close) the index had clawed back from being down 70-points to being just 32-points in the red. The market was feeling reasonably constructive into 4 pm but alas big MOC sell orders are often a sign equities have lost their mojo, at least for a while, remember in Wednesday’s Portfolio Report after the RBA’s 8th consecutive....
The phrase “what a difference a day/week etc” makes is often used liberally but 2022 certainly qualifies when it comes to interest rates, yesterday saw the RBA hike the Official Cash Rate for a record 8 consecutive times taking us from an all-time low of 0.1% to a 10 year high above 3%. Australia has seen 2 major extremes in the blink of an eye, it feels like only yesterday when Philip Lowe said that interest rates would stay low until 2024 – he actually started the rhetoric in 2020 and continued it through much of 2021.
The ASX200 rallied another +0.3% on Monday courtesy of China’s reopening shift which propelled resource stocks higher on hopes that the global economy can avoid a deep contraction in 2023, unfortunately, the move caused the market to polarise as bond yields rallied in line with the optimism towards the growth outlook. The move in bonds resulted in over half of the market closing lower but when the heavyweight resources advance strongly the market often ignores the crowd:
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