Viewpoint: Bullish
It’s not often you see BHP rally 5% in one session but all it’s actually done this time around is take The big Australian back to the mid-point of its last few years’ trading range, however, we shouldn’t forget that while BHP trades sideways it continues to pay investors simply huge fully franked dividends.
WDS rallied +2.6% yesterday testing it’s 2018 swing high in the process, we remain bullish towards crude oil hence we see no obvious reason to lighten our exposure to WDS, even though it’s now surpassed our initial target i.e. the trend is currently our friend here. Overnight the Energy Sector was again best on the ground advancing +1.8%.
The ASX200 promised so much more than it finally delivered on Monday although it still closed up +0.6%, well above the psychological 6900 area. Both the US S&P500 Futures and local index gyrated around on hopes and fears that China would abandon its damaging Covid Zero policy sooner rather than later. On Friday hope that they were about to reopen their economy…
Precious metals were strong on Friday night with volatile member silver rallying over +7% in a session that looks poised to change the downtrend of 2022, it’s not out of the woods yet but it’s close!
The Australian Dollar rallied strongly on Friday as would be expected for a commodities-based currency. If we are correct and last week’s advance in the like of copper is just the beginning then the $A should be set to bounce back towards 70c into Christmas.
Copper even managed to outperform crude oil on Friday propelling related stocks in the US significantly higher, the Global X Copper ETF we hold in our Global Macro ETF Portfolio surged 9.8% boding well for OZ Minerals (OZL) and Sandfire (SFR) this morning. At this stage, we see no reason not to believe copper won’t maintain its upside move into Christmas.
Last week and especially Friday was all about the surge in commodity prices courtesy of weakness in the $US and ongoing hopes that China might finally reopen the country – I heard an interesting theory from a well-respected doctor on the weekend while watching kids’ sport, he said the China Covid Policy stems from the fact that their vaccines…
The UK FTSE may have endured bad announcement after another through 2022 but its stock market has outperformed and after Friday’s aggressive resources-led recovery it’s now only 4.6% below its pre-Covid high, a pretty amazing performance compared to its peers. The great news locally is the ASX and FTSE and highly correlated hence one of the reasons for our bullish caveat is that we can see surprises on the upside.
US stocks don’t currently appear as conclusively bullish as our own but that’s no great surprise at this stage of the cycle, resources are rallying while tech stocks remain choppy and unsettled, Australia has a large exposure to the former, and the S&P500 the latter.
The ASX200 is set to open up around +1.3% this morning, basically just as it did on the last two Mondays – memo to self don’t go short on Fridays until further notice! This morning’s strong opening is likely to see buying across the board but some influential heavyweight resources are likely to be up in the region of 5-10%, a test of 7100-7200 now feels…
