Viewpoint: Bullish
The ASX200 pushed ever higher last week taking its advance to ~12% year to date but following sharp losses in the US on Friday this week’s going to start off on a very different footing, the SPI futures are calling the local market to open down -1.5% this morning, wiping out over half of the months gains in one fell swoop.
IAG has largely gone nowhere over the last 12-months during which time both the index and Banking Sector have rallied nicely.
Serial underperformer QBE has finally started advancing solidly and in hindsight I wish I had given more weight to our technical analysis as opposed to fundamental one which still said steer away.
Interesting following the FOMC’s relatively hawkish statement on Wednesday their time US longer dated bond yields have actually slipped lower with the 30-years making fresh 4-month lows overnight, a move which undoubtedly helped the rally by US tech.
US stocks have largely enjoyed a strong 2021 but the last month has seen some major outperformance from the tech end of town with the NASDAQ rallying ~9% while the Dow Jones has trod water with the drift lower in bond yields the main tailwind for the disparity in our opinion.
No change with US stocks as sector rotation dominates proceedings while the underlying broad index remains within 1% of its all-time high i.e. investors are remaining committed to stocks but continually evolving which market pockets they want to sit overweight.
Commonwealth Bank (CBA) is garnering most of the headlines for the Australian banks as it soars above $100 to fresh all-time highs.
The ASX200 initially ignored a weak lead from US indices yesterday following the Feds announcement that it now expects 2 rate hikes by the end of 2023 – a very logical view in our opinion considering the extremely strong economic recovery over the last year.
WHC -11.52%: The production update from WHC finally hit the wires this morning and it was overall soft, thankfully they have a massive coal price tailwind!
IGO is transitioning to a business which can deliver commodities which are critical for clean energy, an enviable journey but one which might have some bumps along the way.
