Viewpoint: Bullish
US stocks experienced a volatile session overnight as investors found themselves second-guessing the fallout implications of the collapse of Silicon Valley Bank (SIVB US) – in a nutshell growth stocks enjoyed a tailwind from the plunge in bond yields whereas banks wobbled badly on contagion fears following the collapse of SVB e.g. the US S&P500 Banking Index fell another -7% whereas the tech-based NASDAQ rallied +0.8%.
Mineral sands operator ILU has traded strongly considering the sell-off in China-facing resource stocks post Beijing’s lacklustre growth targets for 2023. The stock initially dipped after last month’s earning report although we felt it reported a resilient market environment despite the broader macro outlook.
We hold SFR in both our Flagship Growth and Emerging Companies Portfolio, MM remains bullish copper medium/long term but as can be seen from the chart below, the stock has both halved and doubled over the last year i.e. there’s plenty of value to be added to portfolios when this particular elastic band stretches too far.
REA has been treading water for the last 8 months but similarly to XRO we believe the stocks are poised to “pop” higher in the coming weeks plus the stock paid a 75c fully franked dividend this week.
In the case of SEK, it didn’t trade within our 1% threshold, though we are keen to add it to the portfolio and will amend the alert this morning if we need to. Otherwise, the current alert remains active whilst it appears on the website (which is generally 48 hours).
A positive announcement by the cloud-based accounting platform yesterday with a definite pivot to a more balanced approach around growth. XRO previously ran operating expenses at 84% of revenue, with a lot of this going into growth initiatives. Yesterday, the new CEO Sukhinder Singh Cassidy, announced plans to pare this back to 75% with a 15% reduction in the workforce the major saving.
US stocks struggled to hold onto early gains overnight as US bond yields edged ever higher but encouragingly the NASDAQ still closed positive even as US 2-year yields closed above 5%. Similar to Australia yesterday the Energy Sector was worst on the ground slipping -1%.
Yesterday saw WHC dip under $7 for the first time since August 2022 as it raced the underlying fossil fuel to the proverbial bottom, neither has enjoyed the recent lacklustre growth forecasts out of Beijing, nor the more mild winter in Europe.
While Global Lithium was one of the better performers in the portfolio in the past week, Lithium stocks in general have been under pressure since the start of February. The reason for the slide in the space comes on the back of demand weakness which has weighed on the spot price which is down ~30% this year. Battery manufacturers and other downstream users have been destocking inventory on perceived weakness in demand from China, though this is likely to be temporary with stimulus measures targeted at growing the proportion of EV’s being sold
Online recruitment business SEK delivered a solid 1H23 result last month while they tightened guidance towards the lower end for the full year. Revenue came in at $627mn a beat to the $617mn consensus but importantly in today’s environment no big miss. A solid result with no surprises which in today’s tough operating environment is a large tick for the management.
