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Weekend report 04/03/2023 08:47

The Weekend Q&A: stocks are becoming increasingly ambivalent to higher interest rates

The ASX200 slipped another -0.3% last week but in our opinion, it felt like a solid performance as equities shrugged off short-term bond yields continuing their unrelenting march to multi-month/year highs i.e. The Australian 3-year closed above 3.6% as they edged ever closer to fresh 20-year highs around 3.8% while the US 2-years did scale fresh 15 year highs above 4.9%. As we often say markets that don’t fall on “bad news” are strong:

Weekend report 25/02/2023 08:25

The Weekend Q&A: The American consumer remaining strong is pushing up rates

The ASX200 slipped another -0.5% last week with a -4.3% drop by heavyweight BHP weighing on both the index and the Materials Sector, however, the market’s pullback has started to lose momentum as company earnings fail to deliver the disasters many had feared/expected. Reporting season remains the dominant factor on the stock level but it’s interesting that things aren’t panning out as would be expected on the sector level:

Weekend report 18/02/2023 08:53

The Weekend Q&A: The ASX loses its mojo under the combined weight of the RBA, FED & CBA

Friday’s tough day for equities took the ASX200 lower for a second consecutive week, almost 3% below its early February high. Reporting season has created some major volatility on the stock/sector level which is no surprise but its not common to see Commonwealth Bank (CBA) lead both the sector and index lower - Australia’s largest banks closed down -8.2% for the week with the average fall across the “Big Four” come Friday being -5.6%, remember MM often says “the market cannot go up with the banks”.

Weekend report 11/02/2023 08:49

The Weekend Q&A: Stocks struggle within a whisker of all-time highs

The ASX200 surrendered some of its 2023 gains last week finally closing down -1.65% with the 7400 support area suddenly the closest psychological level as the market appears to have simply run out of steam after surging +9.6% from its early January low. Last weeks weakness was broad based with all 11 sectors falling but the largest declines were in the interest rate sensitive real estate, IT and Healthcare stocks whereas the financials who often see improved margins/earnings through periods of rising interest rates were the best on ground, but they still slipped -0.35%. Central banks have again delivered the backdrop which has doused the markets recent mojo:

Weekend report 04/02/2023 08:34

The Weekend Q&A: Suddenly all-time highs are less than 1% away!

The ASX200 rallied another +65-points, or +0.9%, last week with most of the gains coming on Friday courtesy of the major banks, as most people know Commonwealth Bank (CBA) is now trading at an all-time high. However, while the index is clearly strong the story beneath the hood remains extremely mixed: Winners: healthcare, tech, building and property e.g. CSL Ltd (CSL) +11.4%, SEEK (SEK) +9.8%, Xero (XRO) +8.9%, James Hardie (JHX) +9.5% and Goodman Group (GMG) +5.2%. Losers: energy, insurance, resources e.g. Woodside Energy (WDS) -2.2%, IAG Insurance (IAG) -6.9%, IGO Ltd (IGO) -7.4% and BHP Group (BHP) -3.3%.

Weekend report 28/01/2023 10:22

The Weekend Q&A: Fresh 9-month highs for the ASX200 on average news – again!

The ASX200 has now advanced +6.5% this month and we’ve still got two trading days remaining for January with Monday set to open back above 7500. The local Tech Sector led the gains last week rallying +2.8% supported by Real Estate +2.5% which was impressive considering that the local inflation data came in far worse than expected suggesting further rate hikes lay ahead but as we’ve alluded to previously news thats “not too bad” is now being embraced by the battered growth stocks. Under the hood the winners and losers circle was made up of 2 very different groups of companies:

Weekend report 21/01/2023 09:51

The Weekend Q&A: New 9-month highs for the ASX200 on no obvious news

The ASX200 has now advanced +5.9% this month and we’ve still got more than a week to go! The buying has been broad-based with only 14% of the main board down so far in 2023 however it has been the strength in the strength in the influential banks, healthcare and resource stocks that’s driven the index higher. The gains in the following 6 stocks illustrate the story of the tape in January:

Weekend report 17/12/2022 08:37

The Weekend Q&A: Central banks threaten to be the Grinch of Christmas

The ASX200 struggled under the weight of the central bank’s rate hikes and net hawkish rhetoric last week although bonds didn’t pay any attention which actually suggests to us it was more a case of stocks had run too hard, too fast from their October lows e.g. In only 2 months the ASX200 surged +15%. Under the hood of the market, it was a mixed bag with strong energy and real estate stocks being more than offset by selling in the miners and healthcare names. Most of us already know the respective moves by the major central banks over the week but the standout 3 points were as follows:

Weekend report 10/12/2022 09:19

The Weekend Q&A: Inflation & rates have again started to weigh on stocks

The ASX200 bounced into the close on Friday but it wasn’t enough to prevent an 88-point decline over the week, the selling was broad-based across the 5 days with some strength in the gold and defensive stocks unable to halt the -1.2% dip. The local index was trading around 7320 just before the RBA’s 0.25% rate hike last week after which we expressed the view that it would take 1-2 weeks for stocks to put the move into the rear-view mirror, perhaps the buyers will return next week with Christmas only a fortnight away.

Weekend report 02/12/2022 17:16

The Weekend Q&A: Decembers already making new 7-month highs & it’s only the 3rd!

The ASX200 closed out last week on the back foot although it still added +0.6% for the 5-days with gains in resources and tech stocks more than offsetting weakness in energy and discretionary retail names. The main story last week was the dovish comments from Fed Chair, Jerome Powell which led to weakness in the $US and bond yields as rate-sensitive stocks/ sectors benefitted accordingly: The combination of the weak $US & falling bond yields set the resources alight – IGO Ltd (IGO) +8.6%, Newcrest Mining (NCM) +5.5%, South32 (S32) +4.2% and BHP Group (BHP) +3.5%. The dovish rhetoric from Jerome Powell sent many tech stocks soaring – Xero (XRO) +8.8%, Seek (SEK) +7.9%, REA Group (REA) +5% and Altium (ALU) +3.6%. Last week may have been all about the Fed but the coming week is the RBA’s turn to take centre stage as they make their last interest rate move, or not, before February: