Viewpoint: Bullish
The ASX200 managed to hold on to small gains come 4pm on Monday after grinding lower from our midday highs approaching 7450, the index’s highest level since mid-January. The markets feeling a touch tired having already rallied +5.6% in March but although only 40% of the main index closed up yesterday when the banks and big miners are strong the ASX tends to follow suit e.g. Westpac…
We’ve covered this before however as a quick refresher after a few questions from clients. Expect documents in early April, WPL vote at the AGM mid-May, complete early June. BHP holders will own 48% of WPL post the deal & will receive around 0.1768 WPL shares for each BHP share held, around 1 WPL for each 5.65 BHP shares. These WPL shares will have franking attached at the price of the prior close. We would expect BHP shares…
The $A continues to outperform being regarded as a proxy for inflation / higher commodity prices, we can still see a break above 80c over the next 12-18 months – could be a great post COVID time for an overseas holiday.
The war in Ukraine has turned Europe, except the UK’s FTSE, into the underperforming region for stocks – an understandable / logical reaction. We see no reason to 2nd guess what’s in President Putin’s mind hence its nigh on impossible to forecast when things will turn around for these markets, but opportunities are likely to present themselves at some point in time hence it’s a time to be patient.
US stocks extended the previous weeks strong rally post the Feds hike but without the gusto exhibited by the ASX i.e. the US indices have a large tech weighing but has a low resources component. While we remain bullish the S&P500 at least over the coming weeks we believe new all-time highs is going to be a big ask unless we see an unexpected dramatic bullish turnaround towards the high growth FAANG stocks – we think growth stocks bounce but don’t make fresh highs.
The ASX200 again outperformed most global indices last week rallying impressively towards all-time highs, with April commencing on Friday things look good for local stocks short-term i.e. seasonally we’re coming into the 2nd best month of the year, just behind December. We’ve maintained a net bullish / “buy the dip” stance through 2022 which has worked nicely, short-term the market still “looks & feels great” with a pop to new highs remaining our preferred scenario.
The FTSE continued its strong recovery overnight taking it to within 3% of its 2022 swing high and 6% off its 2018 all-time high, the strong performance is largely being buoyed by its decent resources exposure. As we know the encouraging news is the ASX and FTSE are highly correlated indices and we can see them both making new all-time highs in the coming weeks especially in a market dominated by bears.
US stocks pushed higher overnight with tech posting fresh 6-week highs, the “easy” money may already be behind us but MM still feels the path of least resistance is on the upside hence we’re maintain our bullish skew for now.
MM was gearing up to buy WPL under $30 only for it to bounce from $30.27 frustrating but something similar is probably going to happen again in 2022. The amount of US petroleum inventory is at 14-year lows which obviously creates a tailwind for WPL but considering the current volatility and huge rally year to date we’re not tempted to chase the stock even if it pops above $35, for now we will remain patient looking to buy a pullback sub $30.
BKW rallied 5% yesterday after a 269% jump in 1st half profits driven by investments and its joint venture property trust with Goodman Group (GMG). The numbers were solid on all levels – revenue up 24% to $535mn, EBIT up 254% to $450mn helping the company lift its dividend to 22c. We agree with the MD that the business is in a strong position with a diversified portfolio of assets, like all investments…
