The local index enjoyed another strong week as we approach the end of November, the ASX200 finally closed up just over 100 points courtesy of solid performances from the banks, energy, insurance, and major miners. In a comparatively uneventful 5 days, the two areas that caught our attention were both on the wrong side of the ledger, the previously high-flying coal, and ESG names, which are ironically diametrically opposed when it comes to the environment. We like both sectors into weakness which is illustrated by our recent purchases of WHC & NHC but as some performance reversion creeps into the market we can’t discount this recent downside trend having more legs, especially in the crowded ESG stocks:
A +0.23% bounce on Friday saw the ASX200 sign-off last week basically unchanged after a very quiet week on the index level although as has been the norm through 2022 there were some interesting moves under the hood with 4 stocks rallying by over +10% while 3 fell by more than -15%, I’m glad to say MM avoided the hand grenades this week while enjoying strength from Pendal Group (PDL) +15.5% and Sandfire Resources (SFR) +13.8%. The major ASX copper stocks delivered some newsworthy attention which is likely to be ongoing over the coming week (s):
Friday’s dramatic +2.8% surge by the ASX200 saw the local market close up +3.8% for the week at levels not enjoyed since early June i.e. we’ve already exceeded our target of testing the August highs into Christmas. The weaker-than-expected US CPI lit up equities at the end of last week as hopes increased that the Fed will ease the rate of its interest rate hikes following the painful journey through 2022. Over the 5 days the huge relief rally was primarily focused on the resources stock although the tech names played some decent catch-up on Friday:
Winners: Evolution Mining (EVN) +30%, Sandfire Resources (SFR) +22.3%, IGO Ltd (IGO) +10.8%, and Goodman Group (GMG) +8.6%.
Losers: National Australia Bank (NAB) -2.4%, Whitehaven Coal (WHC) -19.4%, and QBE Insurance (QBE) -0.6%.
MM has been waiting for the final piece of our macro forecast to fall into place and the strong reversal in the $US and bond yields last week following Thursday’s weak CPI appears to be it, if we are correct the growth stocks, led by tech, will now spearhead the market’s recovery into Christmas while companies that enjoy rising interest rates such as QBE Insurance (QBE) and Computershare (CPU) look set to underperform into 2023.
• MM now believes the $US and bond yields have peaked for 2022 following relatively subdued inflation data.
Optimism around US inflation and interest rates extended on Friday night with strong gains in the tech-based NASDAQ and interest rate-sensitive names filtering down across the broad market e.g. Tech +1.7% and Materials +1.2%. Another strong night by commodities should really set the ASX on its way next week, copper +4.9% and oil +2.9% caught our eye, and the SPI Futures are calling the local market up another +0.6% this morning, back towards 7200!
• We continue to believe both US & Australian equities will be higher come Christmas with surprises feeling more likely on the upside.
The ASX200 closed down -0.9% on Friday but it still managed to end a choppy week up +1.6% courtesy of broad-based gains led by the Gold, Real Estate, Utilities, and Industrial Sectors, a pretty good performance in our opinion taking into account some poor stock specific news from both home and abroad, Chinas increased unfriendly market policies plus of course the uncertainty around the looming rate decisions from both the RBA & Fed.
The ASX200 ended its penultimate week of October down -1.2% with the damage unfolding over the last 2-days hence going into the weekend the market actually felt far worse, however, the market remains up over 200-points for the month – it certainly doesn’t feel like it! Yet again the Energy Sector was best on the ground while the Utilities Sector carried the wooden spoon. We can see the local index remaining in the 6600 - 6800 trading range into next month although we still believe the risks are on the upside.
The ASX200 closed out the 2nd week of October with a strong +1.75% rally, even after Thursdays US inflation data came in higher than expected, after struggling for most of the week the local index finally ended down just 4-points and impressively up almost 300-points halfway into the infamous month. MM has been repeating our view over recent weeks but the last 24-hours illustrated the point perfectly as we await the latest Bank of Americas Fund Managers Survey we know that this time last month investors cash levels sat at 6.1%, up from 5.7% in August and well above the long term average of just 4.8%.
The ASX200 finally enjoyed a strong week even after surrendering -0.8% on Friday, the local index still rounded out the 1st 5-days of October up +5.5%. I know it’s very early days but the bears shouldn’t dismiss the seasonal strength stocks have enjoyed through Q4 over the last 20-years especially when we consider the weakness through the first 9-months of the year. Last weeks main catalyst for strength in local stocks came from the RBA although US stocks gave a helping hand early on:
The ASX200 tumbled into the close on Friday ending September on the same note as most of the last 6-weeks, the greater than 500-point monthly decline has been primarily instigated by rhetoric from the Fed who turned very hawkish at the end of August following the Jackson Hole economic symposium, and ongoing comments from the board have maintained the pressure on risk assets ever since. Investors started last month focusing on rising interest rates before later worries also started to encompass fears around a recession into 2023, and specifically how deep/long will it be.
The ASX200 tumbled into the Feds FOMC meeting on Wednesday only to compound the losses throughout an awful session on Friday which ultimately resulted in the local market falling over -2.4% for the week, with all 11-sectors closing lower led by the interest rate sensitive Tech, Utilities, Real Estate and Consumer Discretionary Sectors - all of which fell around 5%, or more. The Fed and Bank of England combined forces to dash market hopes that interest rates were approaching their peak, if anything the fight against inflation has been ramped up:
The Fed hiked rates by 0.75% and the BOE by an aggressive 0.5%, which poses the question what next from the RBA in 2-weeks’ time?
The big shake up from the Fed was delivered by its rhetoric - Jerome Powell said that a “soft landing for the US economy will be very difficult to achieve” i.e. buckle up for a recession.
A +0.23% bounce on Friday saw the ASX200 sign-off last week basically unchanged after a very quiet week on the index level although as has been the norm through 2022 there were some interesting moves under the hood with 4 stocks rallying by over +10% while 3 fell by more than -15%, I’m glad to say MM avoided the hand grenades this week while enjoying strength from Pendal Group (PDL) +15.5% and Sandfire Resources (SFR) +13.8%. The major ASX copper stocks delivered some newsworthy attention which is likely to be ongoing over the coming week (s):
Friday’s dramatic +2.8% surge by the ASX200 saw the local market close up +3.8% for the week at levels not enjoyed since early June i.e. we’ve already exceeded our target of testing the August highs into Christmas. The weaker-than-expected US CPI lit up equities at the end of last week as hopes increased that the Fed will ease the rate of its interest rate hikes following the painful journey through 2022. Over the 5 days the huge relief rally was primarily focused on the resources stock although the tech names played some decent catch-up on Friday:
Winners: Evolution Mining (EVN) +30%, Sandfire Resources (SFR) +22.3%, IGO Ltd (IGO) +10.8%, and Goodman Group (GMG) +8.6%.
Losers: National Australia Bank (NAB) -2.4%, Whitehaven Coal (WHC) -19.4%, and QBE Insurance (QBE) -0.6%.
MM has been waiting for the final piece of our macro forecast to fall into place and the strong reversal in the $US and bond yields last week following Thursday’s weak CPI appears to be it, if we are correct the growth stocks, led by tech, will now spearhead the market’s recovery into Christmas while companies that enjoy rising interest rates such as QBE Insurance (QBE) and Computershare (CPU) look set to underperform into 2023.
• MM now believes the $US and bond yields have peaked for 2022 following relatively subdued inflation data.
Optimism around US inflation and interest rates extended on Friday night with strong gains in the tech-based NASDAQ and interest rate-sensitive names filtering down across the broad market e.g. Tech +1.7% and Materials +1.2%. Another strong night by commodities should really set the ASX on its way next week, copper +4.9% and oil +2.9% caught our eye, and the SPI Futures are calling the local market up another +0.6% this morning, back towards 7200!
• We continue to believe both US & Australian equities will be higher come Christmas with surprises feeling more likely on the upside.
The ASX200 closed down -0.9% on Friday but it still managed to end a choppy week up +1.6% courtesy of broad-based gains led by the Gold, Real Estate, Utilities, and Industrial Sectors, a pretty good performance in our opinion taking into account some poor stock specific news from both home and abroad, Chinas increased unfriendly market policies plus of course the uncertainty around the looming rate decisions from both the RBA & Fed.
The ASX200 ended its penultimate week of October down -1.2% with the damage unfolding over the last 2-days hence going into the weekend the market actually felt far worse, however, the market remains up over 200-points for the month – it certainly doesn’t feel like it! Yet again the Energy Sector was best on the ground while the Utilities Sector carried the wooden spoon. We can see the local index remaining in the 6600 - 6800 trading range into next month although we still believe the risks are on the upside.
The ASX200 closed out the 2nd week of October with a strong +1.75% rally, even after Thursdays US inflation data came in higher than expected, after struggling for most of the week the local index finally ended down just 4-points and impressively up almost 300-points halfway into the infamous month. MM has been repeating our view over recent weeks but the last 24-hours illustrated the point perfectly as we await the latest Bank of Americas Fund Managers Survey we know that this time last month investors cash levels sat at 6.1%, up from 5.7% in August and well above the long term average of just 4.8%.
The ASX200 finally enjoyed a strong week even after surrendering -0.8% on Friday, the local index still rounded out the 1st 5-days of October up +5.5%. I know it’s very early days but the bears shouldn’t dismiss the seasonal strength stocks have enjoyed through Q4 over the last 20-years especially when we consider the weakness through the first 9-months of the year. Last weeks main catalyst for strength in local stocks came from the RBA although US stocks gave a helping hand early on:
The ASX200 tumbled into the close on Friday ending September on the same note as most of the last 6-weeks, the greater than 500-point monthly decline has been primarily instigated by rhetoric from the Fed who turned very hawkish at the end of August following the Jackson Hole economic symposium, and ongoing comments from the board have maintained the pressure on risk assets ever since. Investors started last month focusing on rising interest rates before later worries also started to encompass fears around a recession into 2023, and specifically how deep/long will it be.
The ASX200 tumbled into the Feds FOMC meeting on Wednesday only to compound the losses throughout an awful session on Friday which ultimately resulted in the local market falling over -2.4% for the week, with all 11-sectors closing lower led by the interest rate sensitive Tech, Utilities, Real Estate and Consumer Discretionary Sectors - all of which fell around 5%, or more. The Fed and Bank of England combined forces to dash market hopes that interest rates were approaching their peak, if anything the fight against inflation has been ramped up:
The Fed hiked rates by 0.75% and the BOE by an aggressive 0.5%, which poses the question what next from the RBA in 2-weeks’ time?
The big shake up from the Fed was delivered by its rhetoric - Jerome Powell said that a “soft landing for the US economy will be very difficult to achieve” i.e. buckle up for a recession.
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