Viewpoint: Bullish
As mentioned earlier when we looked at WPL, Brent Crude literally nudged fresh 7-year highs overnight, we remain committed to our target area around $US100/barrel a move which we believe will catch many investors underweight the unloved Energy Sector as funds have aggressively moved to greener & sustainable mandates.
With the US closed over night we have looked elsewhere for insight / direction. European stocks enjoyed a strong start to the week and MM remains bullish the EURO STOXX targeting a break of its 2021 highs, this index encouragingly has a strong correlation and hence read through for the ASX.
Hopefully this is not about to give VUK the “kiss of death” but the stocks rallying as expected following its sharp sell off in Q4 of 2021 and it remains on track to test / & break back above $4 in the coming months in MM’s view. We own VUK in our Flagship Growth Portfolio.
The Energy Sector is slowly but surely gaining strength after disappointing investors including ourselves over the last 6-months as stocks have largely ignored solid gains from the oil price i.e. Brent Crude is now within a few ticks of breaking out to 7-year highs. This whole sector feels like a champagne cork about to pop in our opinion. We own Santos (STO) in our Flagship Growth Portfolio but not Woodside (WPL).
Buildings products company CSR experienced a tough session yesterday on a broker downgrade prompting money to gravitate towards sector peer Adbri (ABC) whose shares surged over 7% following a supply agreement extension with Alcoa & a broker upgrade. At this stage we see no reason to change our stance and a fresh break back above…
Our preferred scenario remains a bullish start for the ASX200 this year with the 7700-7800 area our ideal target i.e. a “pop” to new all-time highs and no change to our rhetoric of recent months although we are getting a little nervous as US tech names start to wobble. The logical catalyst for a rally above
Overnight we saw a return to selling in the US tech stocks, our preferred scenario is the last few days recovery ultimately continues into February taking the NASDAQ to all time highs but we are very mindful that the growth names are slipping out of favour as investors price in higher interest rates through 2022 i.e. the macro tailwind of recent years is becoming a headwind.
QAN slipped over 2.3% yesterday following the news that the flagship airline has cut almost 1/3 of its flights this quarter due to the Omicron strain creating lower demand– no great surprise as Virgin Australia did the same earlier in the week. Similar to our view elsewhere we believe this is another speedbump in the economic recovery which is demonstrated
NIC surged to fresh all-time highs yesterday as investors went in search of future facing cleaner commodity exposure. Were not excited around the risk / reward for NIC above $1.60 but if we were long it would be a case of place stops at $1.47 and hopefully hold on for the ride.
The ASX200 enjoyed a solid Thursday courtesy of ongoing strength in banks and resources with heavyweights BHP Group (BHP) & RIO Tinto (RIO) both gaining around 4%. Losers marginally trumped the winners but when the indexes 2 largest sectors, which make up around 40% of the market rally the index tends to follow suit. Blackstone’s increased…
