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:
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:
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.
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:
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 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:
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.
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:
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.
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