Viewpoint: Bullish
Sellers hit the Uranium sector yesterday with weakness across the board to varying degrees. This sector has now become the focus for many short term traders and higher volatility due to hot money should now be expected – which creates opportunity. When we sold PDN in the Emerging Companies Portfolio at 95c we always had the intention of repurchasing…
A2M has finally enjoyed some love over the last fortnight albeit after a shocking 12-months. The stocks finally received some positive broker support around current levels plus there still remains the takeover potential with Nestlé rumoured to be a potential suitor.
WHC rallied to fresh multi-month highs yesterday before slipping into the close, we’ve discussed taking profit on our WHC position into such a “pop” hence we felt an update was warranted this morning:
The ASX200 enjoyed a solid start to the week although it did experience some pretty aggressive selling into the close which aligns with our view that the strong post COVID rally is maturing i.e. some sellers are appearing into strength. While the banks led the charge on Monday they were very well supported by the “re-opening trade” as Gladys…
Elsewhere economic bellwether copper has found clear support after correcting over 19% from its May high. We are still targeting a test of $US500/lb into Christmas and by association fresh recent highs by the related names such as OZ Minerals (OZL) where we recently increased our position. We should be mindful that things are happening in a hurry at present, prices could easily top out and then fail before Christmas.
Commodity prices have been mixed over recent weeks but overall considering the worries around global growth caused by the demise of China Evergrande prices have held firm. Crude oil has actually broken up to fresh recent highs implying that concerns towards the demand side of the curve have dissipated, even if the rally is more supply driven.
Last week we saw the Fed deliver a hawkish outlook on interest rates, futures market are now pricing in rate increases from November 2022 which is a vote of confidence in the US economy. Obviously the critical part of this puzzle is whether Jerome Powell et al can manage the reduction of stimulus in such a way as to navigate controlled inflation without hindering economic expansion, a delicate balance that’s likely to determine the health of risk assets over the coming years.
The combination of weakness in China and a bounce in the $US has put pressure on the emerging markets indices since February but we like the risk / reward around current levels especially considering our view towards the 2 aforementioned macro influences.
US stocks shrugged off issues in China last week to ultimately close higher following upbeat and hawkish Fed minutes from their recent FOMC meeting – stocks prefer certainty even if it suggests rate hikes in late 2022. We like markets that remain firm in the face of “bad news” and in this case we can see the Dow breaking above the 36,000 area in the coming weeks / months.
WTC has been on our radar since it blew away expectations with its FY21 result, catching out some short sellers in the process. The logistics solutions business had some very attractive statistics in its numbers:
