Viewpoint: Bullish
US stocks appear to be consolidating their recent gains as we head into the Fed’s next rate move, the tech stocks have remained the weakest link as Meta Platforms (META US) continues to plumb multi-year lows i.e. when stocks miss badly today’s market “your first loss is often the best loss”.
LOV rallied +5.2% yesterday closing within one good day of its all-time high, impressively this is the only main retail stock to be up in 2022 illustrating how not all boats rise/sink as one across a sector. This fashion jeweller and retailer delivered an excellent result back in August with revenue coming in at $459m, up 59% on FY22 while its high gross margins climbed to 78.9% – there was nothing in the result not to like in our opinion.
The ASX200 enjoyed a strong end to October rallying over 1% following in the footsteps of Wall Street on Friday night – the ASX200 ended the month up +6% as we now head towards the seasonally strongest period of the year. Outside of the Resources/Energy Sectors losers were fairly thin on the ground as only 20% of the main board declined on the day – the RBA’s rate decision today didn’t appear to unnerve too many investors i.e. a controlled rate rise is “old news”.
PMV +5.57%: Rallied today following an update provided aftermarket on Friday, normally a time reserved for downgrades! That wasn’t the case with PMV saying that global sales for the first 12 weeks of 1H23 are +42.8% on 1H22 and +21.7% on 1H20 (pre-covid). Based on the 21.7% growth versus pre-covid numbers, this implies total sales that are around…
No change, the copper price continues to illustrate the market’s unsure of where the global economy is headed through 2023, the Fed is likely to provide some definitive direction later this week. The bulls could argue that the industrial metal has been extremely resilient in the face of increasing recession fears whereas the bears will counter this often referred to as an excellent leading indicator of economic strength has failed to bounce even after plunging ~35%.
From a risk/reward perspective, we continue to believe US stocks have bottomed and will rally into Christmas and potentially early 2023 – our view is still based on how short/underweight traders and investors are positioned. October’s 8.8% rally by the US equities climbed an ongoing wall of worry and if the Feds comments are “not too bad” this week we could be significantly higher before many investors have even considered their underweight/short stance.
The ASX200 is set to open up around +1.4% this morning, just as it did last Monday, this time it threatens to test the psychological 6900 area. If we follow Friday’s impressive performance on Wall Street the financials & tech stocks are likely to lead the gains although it’s hard to imagine investors chasing stocks into tomorrow’s RBA decision, especially after the positive outcome enjoyed last month i.e. have stocks already enjoyed their RBA sugar hit?
MQG -0.02%: first half results were out for the investment bank came in 5% ahead of expectations today, though the stock gave up strong gains into the afternoon. The result was driven by a $2b net profit from their commodities business, and the company lifted guidance for this segment from a small fall for the full year, to a small increase. Banking and…
CXL -18.98%: the green industrial solutions business was smacked today after it was notified two separate grants announced by the Morison Government had been pulled by the new Labor Government. In May, Calix were granted $11m to a carbon capture project with AdBri (ABC), and a $30m grant for a project with Boral (BLD) both for carbon capture technology…
We discussed APA on Wednesday, in our opinion the stock now offers excellent value after being dumped ~25% in just 2-months. We believe the certainty around the Basslink deal will ultimately lead to a recovery in the share price and with the stock delivering a strong yield and earnings linked heavily to CPI, we feel some patience is warranted.
