Global bond yields posted fresh multi-year highs last week with the hawkish move sending stock investors running for cover. The RBA and Fed may have hit the “pause button” in recent months but bond markets, following hawkish rhetoric from central banks, now believe they will need to hike again in 2023 to arrest inflation. The major problem for equities was that investors had positioned themselves for a pivot/top sooner rather than later and even some potential for rate cuts before Christmas – we always believed economists were dreaming to hope central banks would start cutting interest rates in 2023.
The ASX200 edged higher on Friday in a pretty uneventful conclusion to what’s been a fascinating Financial Year, by now subscribers know that the broad-based market has shrugged off a blanket of negativity to end the year up over +10%, plus of course dividends. However, it’s now time to look forward, not back, as the market toys with the idea of peak interest rates this side of Christmas but pessimism persists towards earnings over the next year. A very famous investing/trading book called Reminiscences of a Stock Operator by Edwin Lefevre, which we highly recommend for “students” of the market, has a couple of sayings that we believe accurately reflect the position of both the last few and next few years:
The ASX200 experienced its worst 48 hours in many months to close out last week with waves of selling through the SPI Futures dragging the broad market lower – the ASX200 fell -3.8% from its Tuesday high. The brunt of the selling was born by the Resources and Tech Sectors with the former likely on increased recession fears whereas the latter came under pressure from rising bond yields and some profit taking into EOFY. There were some major names in the losers’ corner through the week while winners were far thinner on the ground e.g. on Friday less than 10% of the main board closed in positive territory,
The ASX200 ended last week up +1.8% with the influential Tech, Financial and Materials Sectors all closing up over 3%, if wasn’t for a painful downgrade by heavyweight CSL Ltd the index would have been testing multi-week highs. China lit the fuse in the miners while the Fed didn’t deliver any nasty surprises after a market-friendly inflation read on Tuesday and subsequent pause on interest rates on Thursday. We’ve mentioned a few times over recent weeks that the markets positioned too bearishly, which has been illustrated by how easily stocks have shrugged off a plethora of bad news but one glimmer of hope from Beijing and the markets threatening to break out on the upside after many weeks of consolidation.
The ASX200 experienced an eventful week which included surprise rate hikes by both the RBA and Bank of Canada yet the local market ended the week down just -0.3% however it was a far more interesting week under the hood of the market as the aggressive moves by central banks plus accompanying hawkish rhetoric changed investors sentiment on the stock and sector level:
The ASX200 ended the week down just -0.1% as we waved goodbye to May which ultimately lived up to its bearish seasonal reputation falling -3%. We’re starting to wonder about the magnitude of news that will be required to awaken equities from their current slumber, there were 2 major events last week and yet the index closed basically unchanged
Investors remain very concerned that a recession is approaching fast which hasn’t been helped by the ongoing political bickering around the US debt ceiling between Biden and McCarthy. We still believe the balance of probability is skewed heavily to a compromise which will send the US S&P500 to fresh 2023 highs but the ASX200 looks far less likely to challenge its equivalent levels as both the influential banks and resources weigh on the index, our index simply isn’t weighted as heavily towards the tech sector as the U
The ASX200 eked out another small gain last week, finally closing up +0.26% as the sector rotation from value into growth continued unabated even as local 3-year bond yields rallied to their highest close in 10 weeks – we question if the likes of tech can continue to ignore the move in bonds for much longer, especially if it gathers momentum. However, as the EOFY approaches a firm $US and strong earnings from some major tech names have maintained the trend which began in late 2022, last week was a simple case of the “song remains the same” but gains, in particular, became far more stock specific:
The ASX200 eked out a small +0.5% gain last week in one of the quietest weeks we’ve seen since COVID shook risks assets to their very foundations, the local market rotated in an extremely tight 1% range with recession fears weighing on the resources while tech and healthcare stocks led the gains courtesy of stability returning to the bond markets as analysts start to call for central banks to pivot on rates. A classic playbook, when bond yields fall/stabilise growth stocks usually benefit often to the detriment of value names i.e. fund managers are positioning themselves for a recession:
The ASX200 fell -1.2% last week following a poor performance from the banks both at home and in the US, the ASX200 Financial Sector closed out the week down -3.4% while the Utilities and Real Estate Sectors were the only 2 market pockets to close in positive territory. The local banks suffered as the US regional Banks plunged another -20% before bouncing on Friday while local sentiment soured following Thursday’s disappointing result from National Australia Bank (NAB), better earnings from ANZ Bank (ANZ) and Macquarie Group (MQG) on Friday weren’t enough to repair the damage
The ASX200 edged higher on Friday in a pretty uneventful conclusion to what’s been a fascinating Financial Year, by now subscribers know that the broad-based market has shrugged off a blanket of negativity to end the year up over +10%, plus of course dividends. However, it’s now time to look forward, not back, as the market toys with the idea of peak interest rates this side of Christmas but pessimism persists towards earnings over the next year. A very famous investing/trading book called Reminiscences of a Stock Operator by Edwin Lefevre, which we highly recommend for “students” of the market, has a couple of sayings that we believe accurately reflect the position of both the last few and next few years:
The ASX200 experienced its worst 48 hours in many months to close out last week with waves of selling through the SPI Futures dragging the broad market lower – the ASX200 fell -3.8% from its Tuesday high. The brunt of the selling was born by the Resources and Tech Sectors with the former likely on increased recession fears whereas the latter came under pressure from rising bond yields and some profit taking into EOFY. There were some major names in the losers’ corner through the week while winners were far thinner on the ground e.g. on Friday less than 10% of the main board closed in positive territory,
The ASX200 ended last week up +1.8% with the influential Tech, Financial and Materials Sectors all closing up over 3%, if wasn’t for a painful downgrade by heavyweight CSL Ltd the index would have been testing multi-week highs. China lit the fuse in the miners while the Fed didn’t deliver any nasty surprises after a market-friendly inflation read on Tuesday and subsequent pause on interest rates on Thursday. We’ve mentioned a few times over recent weeks that the markets positioned too bearishly, which has been illustrated by how easily stocks have shrugged off a plethora of bad news but one glimmer of hope from Beijing and the markets threatening to break out on the upside after many weeks of consolidation.
The ASX200 experienced an eventful week which included surprise rate hikes by both the RBA and Bank of Canada yet the local market ended the week down just -0.3% however it was a far more interesting week under the hood of the market as the aggressive moves by central banks plus accompanying hawkish rhetoric changed investors sentiment on the stock and sector level:
The ASX200 ended the week down just -0.1% as we waved goodbye to May which ultimately lived up to its bearish seasonal reputation falling -3%. We’re starting to wonder about the magnitude of news that will be required to awaken equities from their current slumber, there were 2 major events last week and yet the index closed basically unchanged
Investors remain very concerned that a recession is approaching fast which hasn’t been helped by the ongoing political bickering around the US debt ceiling between Biden and McCarthy. We still believe the balance of probability is skewed heavily to a compromise which will send the US S&P500 to fresh 2023 highs but the ASX200 looks far less likely to challenge its equivalent levels as both the influential banks and resources weigh on the index, our index simply isn’t weighted as heavily towards the tech sector as the U
The ASX200 eked out another small gain last week, finally closing up +0.26% as the sector rotation from value into growth continued unabated even as local 3-year bond yields rallied to their highest close in 10 weeks – we question if the likes of tech can continue to ignore the move in bonds for much longer, especially if it gathers momentum. However, as the EOFY approaches a firm $US and strong earnings from some major tech names have maintained the trend which began in late 2022, last week was a simple case of the “song remains the same” but gains, in particular, became far more stock specific:
The ASX200 eked out a small +0.5% gain last week in one of the quietest weeks we’ve seen since COVID shook risks assets to their very foundations, the local market rotated in an extremely tight 1% range with recession fears weighing on the resources while tech and healthcare stocks led the gains courtesy of stability returning to the bond markets as analysts start to call for central banks to pivot on rates. A classic playbook, when bond yields fall/stabilise growth stocks usually benefit often to the detriment of value names i.e. fund managers are positioning themselves for a recession:
The ASX200 fell -1.2% last week following a poor performance from the banks both at home and in the US, the ASX200 Financial Sector closed out the week down -3.4% while the Utilities and Real Estate Sectors were the only 2 market pockets to close in positive territory. The local banks suffered as the US regional Banks plunged another -20% before bouncing on Friday while local sentiment soured following Thursday’s disappointing result from National Australia Bank (NAB), better earnings from ANZ Bank (ANZ) and Macquarie Group (MQG) on Friday weren’t enough to repair the damage
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.
