Viewpoint: Bullish
Crude oil futures rallied back to their multi-year highs yesterday as the Ukraine troubles continue – remember Russia is the worlds 2nd largest oil producer which means the escalating sanctions could easily see prices challenge their decade highs. MM believes this month could see a blow off top for oil with the median level between 2011 & 2014 feeling a strong possibility i.e. $US110-120/barrel – what an amazing…
US tech stocks ended slightly higher this morning rallying steadily off the early session lows with almost all the FAANG stocks closing positive. Our stance hasn’t changed, MM believes US tech saw a meaningful low late last week after Russia invaded the Ukraine.
Last week saw LYC shares soar higher after the company delivered an almost 400% increase in 1H 2022 net profit. The rare earths miner is enjoying the EV revolution which still looks in its infancy. MM believes LYC is viable and potentially better alternative to lithium stocks which are trading on high valuations as investors clamour for exposure to Tesla’s et al.
As we mentioned earlier MM is looking for oil to eventually try and scale fresh 2022 highs as the supply / demand imbalance maintains upward pressure on the energy complex. This coincides with the look & feel of WPL which appears destined to add to its impressive gains over the last 2-months, which included a chunky $US1.05 fully franked dividend in late February.
The ASX200 promised so much on Monday but ultimately delivered just a little as Ukraine tensions came back to the fore as Belarus entered the affray and the West continue to gear up sanctions against Russia – before the ASX even opened US stock futures were down over 2%, gold spiked almost $US40/oz higher and brent crude soared 7%, back above $US105/barrel. MM is looking for a few weeks…
If you read the press there would appear to be no reason for UK equities to look good but they do and assuming we get no further “left field” news MM still sees a test of 8,000 area over the coming months i.e. another 6-8% upside.
Aluminium is one of the standout commodities where Russian sanctions are likely to maintain upward pressured on an already very strong market i.e. aluminium has more than doubled from its 2020 low and its hard not to imagine the strong momentum being maintained over the coming weeks / months.
The volatility being experienced by the Euro is very easy to comprehend as war rages across its Eastern borders, the short-term news flow looks destined to dictate swings this week e.g. news that peace talks appear possible is a positive while Putin putting nuclear forces on high alert is another sign of his lack of stability which is likely to send the Euro lower.
US stocks recovered admirably last week even as the Ukraine crisis worsened before our eyes, when we consider the bearish sentiment across by both traders / investors MM believes the path of least resistance is on the upside although how far they can advance will be largely dependent on the influential FAANG stocks.
The ASX200 looks set to open back above 7150 this morning following a very strong Friday night close on Wall Street, especially when we consider the invasion of the Ukraine by Russia, a move that almost every country staunchly opposes. Destabilising tariffs & banking actions have already commenced and its hard to imagine them evaporating in a hurry even if Russia starts withdrawing…
