Viewpoint: Bullish
Longer dated US bond yields continued to drift lower last week with the US 30-years plumbing levels not seen since February as questions around the global economic recovery intensify.
European indices are positioned similarly to the Dow with new highs beckoning but upside momentum favouring buying pullbacks as opposed to chasing strength.
Again no real change as the large tech names continue to push the likes of the NASDAQ and S&P500 to new all-time highs while the old stalwart the Dow struggles to follow suit but it’s now less than 1% away, our optimum upside target is now only a couple of good days away.
The ASX200 continues to bounce around between 7200 and 7400 which considering the economic and social backdrop is an impressive performance in my opinion. The local index has rallied ~28% over the last 9-months yet the very real prospect of a damaging extended lockdown in NSW is being shrugged off by stocks, although both bond and currency markets are taking more notice:
The Global X Lithium & Battery Tech ETF (LIT) invests in the full lithium cycle, from mining and refining the metal, through battery production. The Global X Lithium & Battery Tech ETF (LIT) seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global Lithium Index.
MM has been watching the Oil Sector and in particular STO over recent weeks as the discount between the oil price and related stocks widened ever further.
Copper producer OZL is a quality business that MM has liked through 2021 but we felt the price had rallied too hard, however after correcting over 20% some semblance of value is returning to the miner.
Last month MM moved underweight the banks as we felt euphoria towards the sector had become too heated as the macro backdropped changed.
As mentioned earlier global markets have really started to lose confidence in a strong and sustainable global economic recovery. Overnight we saw fears grow that the Delta strain of COVID, plus what variant may come next, are going to alter the preconceived very optimistic path out of the pandemic that many had been expecting since the vaccine breakthroughs.
Overnight felt like a fairly volatile session which saw declines in stocks, bond yields and the $US as investors lost confidence in the potential rate of the global economic recovery due to COVID escalating in many pockets of the world, not just Sydney.
