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.
Stocks opened slightly higher on Friday and with the US settling into its Thanksgiving long weekend everything was pointing to a low volume quiet day, how things changed over the ensuing hours - we’ve repeatedly said the market will breakout when least expected and that’s one call we certainly got right - just not the direction we were after:
A small bounce on Friday saw the ASX200 close out the week down 0.6%, a pretty good effort considering Commonwealth Bank (CBA) plunged over $10 taking the influential Banking Sector along for the ride – it doesn’t matter how big or powerful you are the markets not tolerating mediocrity when companies report. With ongoing weakness by a number of resources stocks it was left to the growth sector, primarily IT and healthcare to provide some backbone to the local index – this was almost a mirror image of last week’s sector performance which probably helps explain why the ASX200 has gone nowhere for many weeks.
Friday saw the AX200 close out the week little changed courtesy of a 4.7% rally by the Resources Sector, the other 10 sectors all declined over the week with the interest rate sensitive Healthcare, Real Estate and IT Sectors worst on ground. The local index actually felt worse last week due to the broad based nature of the selling but we’re still only 2.5% below Augusts all-time high. We witnessed another failed attempt on the 7475 resistance level on Friday, if / when we close above 7480 don’t be short is the message I would pass on to traders.
The AX200 rallied almost 2% last week as bond yields fell even after the RBA abandoned its “yield curve control policy”, the impact is going to be felt by many homeowners with fixed rate mortgages already being hiked this week e.g. St George’s fixed 3-year increased from just over 2% to 2.39% courtesy of the RBA no longer anchoring local 3-year bond yields to 0.1% plus for good measure they’ve started to prime the market for potential rate rises in 2023.
The AX200 was clobbered 1.44% on Friday to send the local index into the red for both the week and month, things were looking good on the open but the combination “end of month shenanigans” and bond market turmoil appeared to finally take its toll. There’s no doubt the last week of October 2021 will be remembered by all interest rate traders as the time the market kicked the RBA’s butt, whether its simply Round 1 or the end of Philip Lowes fixation on 2024 before we see higher Australian interest rates only time will tell
The AX200 continues to grind towards all-time highs even in the face of ongoing adverse news, last week it was soaring bond yields and a pullback in commodities but as has been the case throughout 2021 when one sector struggles another one steps up to more than compensate e.g. last week saw the financials and real estate sectors offset losses by the resources stocks. This has been the basic narrative during the steady advance of 2021 implying if the selling vanishes as is so typical into Christmas hold onto your hats!
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.
Stocks opened slightly higher on Friday and with the US settling into its Thanksgiving long weekend everything was pointing to a low volume quiet day, how things changed over the ensuing hours - we’ve repeatedly said the market will breakout when least expected and that’s one call we certainly got right - just not the direction we were after:
A small bounce on Friday saw the ASX200 close out the week down 0.6%, a pretty good effort considering Commonwealth Bank (CBA) plunged over $10 taking the influential Banking Sector along for the ride – it doesn’t matter how big or powerful you are the markets not tolerating mediocrity when companies report. With ongoing weakness by a number of resources stocks it was left to the growth sector, primarily IT and healthcare to provide some backbone to the local index – this was almost a mirror image of last week’s sector performance which probably helps explain why the ASX200 has gone nowhere for many weeks.
Friday saw the AX200 close out the week little changed courtesy of a 4.7% rally by the Resources Sector, the other 10 sectors all declined over the week with the interest rate sensitive Healthcare, Real Estate and IT Sectors worst on ground. The local index actually felt worse last week due to the broad based nature of the selling but we’re still only 2.5% below Augusts all-time high. We witnessed another failed attempt on the 7475 resistance level on Friday, if / when we close above 7480 don’t be short is the message I would pass on to traders.
The AX200 rallied almost 2% last week as bond yields fell even after the RBA abandoned its “yield curve control policy”, the impact is going to be felt by many homeowners with fixed rate mortgages already being hiked this week e.g. St George’s fixed 3-year increased from just over 2% to 2.39% courtesy of the RBA no longer anchoring local 3-year bond yields to 0.1% plus for good measure they’ve started to prime the market for potential rate rises in 2023.
The AX200 was clobbered 1.44% on Friday to send the local index into the red for both the week and month, things were looking good on the open but the combination “end of month shenanigans” and bond market turmoil appeared to finally take its toll. There’s no doubt the last week of October 2021 will be remembered by all interest rate traders as the time the market kicked the RBA’s butt, whether its simply Round 1 or the end of Philip Lowes fixation on 2024 before we see higher Australian interest rates only time will tell
The AX200 continues to grind towards all-time highs even in the face of ongoing adverse news, last week it was soaring bond yields and a pullback in commodities but as has been the case throughout 2021 when one sector struggles another one steps up to more than compensate e.g. last week saw the financials and real estate sectors offset losses by the resources stocks. This has been the basic narrative during the steady advance of 2021 implying if the selling vanishes as is so typical into Christmas hold onto your hats!
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