The ASX200 was looking good on Wednesday before the news wires screamed out that Russia had started to invade the Ukraine, we all hoped and prayed it would never happen but Putin obviously has an agenda well beyond the understanding of normal folk. All we know for sure the big loser will be the average person on the street, innocent people are starting to die under the influence of plain stupid power & ego – we’ve seen it before and unfortunately we’ll probably see it again.
The ASX200 again fell 1% on a Friday, it’s becoming an end of week habit! Its very easy to understand why investors / traders were scared to go home exposed this weekend as Monday is Presidents Day in the US making it a 3-day weekend for stocks i.e. plenty of time for further escalation of geopolitical tensions around the Ukraine. You could actually feel the realisation kick in at 3.30pm yesterday, the ASX was holding up really well considering previous falls on overseas bourses but in the last half an hour we succumbed to nerves and dropped almost 50-points to forgo the week’s gains.
The ASX200 fell 1% on Friday as concerns around inflation and rising bond yields again came to the fore as the US CPI (inflation) hit a 40-year high providing ammunition for some hawkish economists to forecast a full 1% interest rate increase by the Fed over the next 3-months. As we’ve said repeatedly over the last 18-months interest rates are going higher, the only question is how fast and the markets have now positioned themselves for an aggressive & fast series of hikes. However not everything was bad news for stocks and there are some fascinating scenarios unfolding on the stock / sector level:
The ASX200 produced another solid performance on Friday to close up 0.6% following an awful session on Wall Street which saw the Dow fall over 500-points and the tech based NASDAQ plunge more than 4% as earnings misses by Meta Platforms (FB US) -26.4% and Spotify (SPOT US) -16.8% crushed optimism that the worst was largely behind the growth stocks. Over previous weeks we had already seen household names Netflix (NFLX US) and PayPal (PYPL US) hammered taking their recent corrections to more than 40% as earnings and outlook misses compounded the already negative sentiment towards tech as bond yields rose. The maths are easy when stocks like Alphabet (GOOGL US) & Amazon (AMZN US) beat expectations they rally around 10-15% whereas those that miss, and there are more of them, are plunging 20-40%!
The ASX200 enjoyed a selling reprieve on Friday which allowed the market to recover over half of the weeks losses but one days bounce most definitely doesn’t herald an end to the months 11.3% plunge, at this stage we feel another test of 6700 is the more probable scenario before we can see a more sustained recovery i.e. the markets looking for as opposed to found a low.
The penultimate session for January did see almost 85% of stocks rally on a day which felt like a definite relief rally but ideally we would like to see the market exhibit some strength into “bad news” before MM would feel confident we had seen the low for Q1.
Friday saw the ASX200 unceremoniously smacked to the bottom of the last 6-months trading range as the fallout from rising inflation / bond yields continued to gather momentum. Only 6% of the ASX200 managed to close up on the day as the unrelenting selling washed through all 11-sectors, the best group on ground still fell by over 1% illustrating the broad based nature of the market capitulation. Aside from the sheer weight of selling a couple things did catch our attention:
The ASX200 remains locked in on the 7400 area but its noticeable how much easier over recent weeks it can endure strong down days although lower volumes play a role as some lucky people enjoy extended holidays, this will probably return to normal next week and beyond. Overall the index finished the week down 60-points with strength in energy, resources and insurance stocks being unable to hold the market in positive territory amidst broad based selling.
Bond yields have dominated 2022 so far as they grind higher exerting pressure on growth names like tech while value stocks, which generally benefit from economic expansion, have commenced the year on the front foot, something the English cricket time feels unable to do. We believe there’s more fuel in this tank but the risk / reward is diminishing fast.
The ASX200 failed to capitalise on a few promising starts last week with CSL’s huge capital raise the main difference between a steady and the eventual disappointing week. On the sector front the value names dominated the winners enclosure led by the resources stocks while the healthcare & tech stocks had a shocker, ironically it had nothing to do with bond yields which actually drifted through the week even after the UK surprised many by hiking interest rates from 0.1% to 0.25%.
The ASX200 rallied over 1.5% last week with all 11 sectors closing in positive territory although it was surprisingly the defensives which led the line i.e. Consumer Staples, Utilities and Real Estate names. It was unusual to see the likes of tech, materials and financials dragging the chain when the market enjoyed such solid gains. At this stage there’s nothing more sinister than some sector reversion / catch up at play towards year end but we are watching out for investors de-risking into 2022.
The ASX200 experienced an extremely choppy week which saw it eventually close down 0.5%, it felt worse most of the time as the market demonstrated a penchant to fall on the whiff of bad virus news whereas a solid night on Wall Street only led to relatively muted local gains. Under the hood the Financials & Resources Sectors were the only 2 sectors to deliver positive returns by Friday as economic optimism slowly returned to money markets as opposed to the broad equity market which clearly remembers the impact of the original COVID & Delta breakouts all too well.
The ASX200 again fell 1% on a Friday, it’s becoming an end of week habit! Its very easy to understand why investors / traders were scared to go home exposed this weekend as Monday is Presidents Day in the US making it a 3-day weekend for stocks i.e. plenty of time for further escalation of geopolitical tensions around the Ukraine. You could actually feel the realisation kick in at 3.30pm yesterday, the ASX was holding up really well considering previous falls on overseas bourses but in the last half an hour we succumbed to nerves and dropped almost 50-points to forgo the week’s gains.
The ASX200 fell 1% on Friday as concerns around inflation and rising bond yields again came to the fore as the US CPI (inflation) hit a 40-year high providing ammunition for some hawkish economists to forecast a full 1% interest rate increase by the Fed over the next 3-months. As we’ve said repeatedly over the last 18-months interest rates are going higher, the only question is how fast and the markets have now positioned themselves for an aggressive & fast series of hikes. However not everything was bad news for stocks and there are some fascinating scenarios unfolding on the stock / sector level:
The ASX200 produced another solid performance on Friday to close up 0.6% following an awful session on Wall Street which saw the Dow fall over 500-points and the tech based NASDAQ plunge more than 4% as earnings misses by Meta Platforms (FB US) -26.4% and Spotify (SPOT US) -16.8% crushed optimism that the worst was largely behind the growth stocks. Over previous weeks we had already seen household names Netflix (NFLX US) and PayPal (PYPL US) hammered taking their recent corrections to more than 40% as earnings and outlook misses compounded the already negative sentiment towards tech as bond yields rose. The maths are easy when stocks like Alphabet (GOOGL US) & Amazon (AMZN US) beat expectations they rally around 10-15% whereas those that miss, and there are more of them, are plunging 20-40%!
The ASX200 enjoyed a selling reprieve on Friday which allowed the market to recover over half of the weeks losses but one days bounce most definitely doesn’t herald an end to the months 11.3% plunge, at this stage we feel another test of 6700 is the more probable scenario before we can see a more sustained recovery i.e. the markets looking for as opposed to found a low.
The penultimate session for January did see almost 85% of stocks rally on a day which felt like a definite relief rally but ideally we would like to see the market exhibit some strength into “bad news” before MM would feel confident we had seen the low for Q1.
Friday saw the ASX200 unceremoniously smacked to the bottom of the last 6-months trading range as the fallout from rising inflation / bond yields continued to gather momentum. Only 6% of the ASX200 managed to close up on the day as the unrelenting selling washed through all 11-sectors, the best group on ground still fell by over 1% illustrating the broad based nature of the market capitulation. Aside from the sheer weight of selling a couple things did catch our attention:
The ASX200 remains locked in on the 7400 area but its noticeable how much easier over recent weeks it can endure strong down days although lower volumes play a role as some lucky people enjoy extended holidays, this will probably return to normal next week and beyond. Overall the index finished the week down 60-points with strength in energy, resources and insurance stocks being unable to hold the market in positive territory amidst broad based selling.
Bond yields have dominated 2022 so far as they grind higher exerting pressure on growth names like tech while value stocks, which generally benefit from economic expansion, have commenced the year on the front foot, something the English cricket time feels unable to do. We believe there’s more fuel in this tank but the risk / reward is diminishing fast.
The ASX200 failed to capitalise on a few promising starts last week with CSL’s huge capital raise the main difference between a steady and the eventual disappointing week. On the sector front the value names dominated the winners enclosure led by the resources stocks while the healthcare & tech stocks had a shocker, ironically it had nothing to do with bond yields which actually drifted through the week even after the UK surprised many by hiking interest rates from 0.1% to 0.25%.
The ASX200 rallied over 1.5% last week with all 11 sectors closing in positive territory although it was surprisingly the defensives which led the line i.e. Consumer Staples, Utilities and Real Estate names. It was unusual to see the likes of tech, materials and financials dragging the chain when the market enjoyed such solid gains. At this stage there’s nothing more sinister than some sector reversion / catch up at play towards year end but we are watching out for investors de-risking into 2022.
The ASX200 experienced an extremely choppy week which saw it eventually close down 0.5%, it felt worse most of the time as the market demonstrated a penchant to fall on the whiff of bad virus news whereas a solid night on Wall Street only led to relatively muted local gains. Under the hood the Financials & Resources Sectors were the only 2 sectors to deliver positive returns by Friday as economic optimism slowly returned to money markets as opposed to the broad equity market which clearly remembers the impact of the original COVID & Delta breakouts all too well.
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