Viewpoint: Bullish
The Resources Sector is arguably the most exciting space of the ASX as we evolve from Covid, however, these are classic cyclical stocks which typically experience decent retracements – it is important to remember MM is bullish on the space and are planning to increase our exposure into any such pullbacks when the sector will by definition look & feel bearish.
Both silver and gold have enjoyed a strong start to 2023 as the $US tumbled after years of appreciation, our view is we’re witnessing just the beginning of a significant advance by precious metals with the risk/reward attractive into any dips back towards $US22 for silver.
MM still believes that commodities look great through 2023/24 and while the $US fails to find any love, even after its 11% pullback over the last 5 months, the short-term pullback we’ve been expecting has proved elusive.
Friday saw US equities bounce back after a tough few days and although our previous target for the NASDAQ of +13,500 looks too optimistic the +2.9% rally on Friday certainly brings a test of 12,500 back into the frame.
The ASX200 continues to enjoy an extremely strong start to January, it’s set to open up +0.5% this morning, only ~1.9% below its all-time high, clear overhead resistance is approaching fast ~7600 but the uptrend is strong and a squeeze higher is a strong possibility.
WHC +6.16%: the largest coal stock on the ASX traded to new YTD highs today following a solid 2Q production update. Despite battling continued wet weather, the company managed Run of Mine production of 4.84mt, up 21% qoq to see EBIT at $2.6b in the first half. Prices came off, but they are still earning a strong margin at the average…
Gold rallied $US25/Oz overnight making fresh 9-month highs, aided by a lacklustre session by the $US, the path of least resistance remains up illustrating why MM has continued to run our large overweight stance in the Gold Sector.
ILU rallied another +2.7% yesterday taking it within a few cents of fresh multi-month highs, the mineral sands operator has rallied impressively post its result sell-off with a degree of cautious optimism towards China’s re-opening providing a clear tailwind.
BHP +1.22%: The Big Australian continues to knock on the door of $50/sh, doing little to harm its prospects in today’s 2Q production update. Western Australian Iron Ore ran at a record pace in the 1H, with 2Q production up 1%. Copper production was also strong, up 16% and met coal coming in +10% on 2Q22. Guidance remained unchanged…
NWL -9.19%, PPS -1.26%: both stocks released 2Q Funds Under Administration (FUA) updates today and followed the slide seen in peer Hub24 (HUB) after their update earlier in the week. Netwealth saw FUA inflows of $2.1b, with FUA rising 7.4% in the quarter, though inflows were slower than 2Q22. Praemium posted a similar slowdown on their end, seeing…
