Viewpoint: Bullish
The ASX200 rallied strongly yesterday following Wall Street’s lead on Friday night as opposed to the savage declines which rolled across Chinese-facing stocks as Xi Jinping took full control of the world’s 2nd largest economy. The local market may have closed up +1.5% but it still surrendered ~30% of its early gains as the Chinese stock market rout weighed on sentiment. However, there were some…
OZL -1.18%: Was trading back below the BHP bid price today following a weaker-than-expected production report – another miner struggling with multiple pressures impacting volumes and costs, although they did maintain full-year guidance. Here’s Peter O’Connors comment… CY22 has been a more challenging year in terms of delivery to guidance than…
The S&P500 has now corrected 28% from its January high and we simply believe enough is enough at least for this leg of the decline, this view is supported by investors’ sentiment hitting another bearish extreme, recently the AAII bearish consensus reached nearly 60%, a level not seen since the sheer panic of the GFC in 2008.
The UK FTSE is shrugging off bad news with ex-Prime Minister Liz Truss becoming the shortest-serving PM in British history, not a statistic to crow about. Technically we can see a break by the FTSE of its post-Covid highs over the coming months which illustrates its relative strength compared to the ASX and S&P500 which are languishing well below their equivalent level.
From a risk/reward perspective we now believe US stocks have bottomed and will rally into Christmas and potentially 2023 – this view is primarily based on how short/underweight traders and investors are positioned. Last week’s rally was the best since June by the US equities, even while bond yields posted fresh highs, suggesting to us the selling has simply exhausted itself leaving room for a pop on the upside.
The ASX200 is set to open up around +1.4% this morning, as it again threatens to break clear of the psychological 6800 area. If we follow Friday’s stellar performance on Wall Street the influential resources, consumer discretionary, and financials are likely to lead the gains while selling should be conspicuous by its absence across the board.
STO recently sold down its 5% equity in PNG LNG, strategically the sell-down partly mitigates STO’s country risk exposure to PNG but also accelerates deleveraging to support further capital management, helping to drive a re-rate and alleviate some commodity price volatility. With a breakeven around $US35/barrel we see significant balance…
Yesterday saw WDS rally over +6% after it delivered record output for the September quarter with sales up 70% to $9.3bn thanks in part to the acquisition of BHP’s Petroleum division. Management also increased their full-year guidance in an excellent update which saw the market reward the strong performance. The company produced…
We discussed earlier how the market’s losers keep on taking but the reverse has also been true in 2022 with the winners continuing to give, the Energy Sector has been the standout, as most subscribers know coal stocks have dominated returns across the board year-to-date e.g. so far in 2022 we have Whitehaven (WHC) +284% and Hew Hope (NHC) 221+%. Yesterday…
Overnight we saw US stocks surrender early gains after bond yields again posted fresh 2022 highs following hawkish remarks from Fed Reserve officials and swaps are now pricing in a 5% peak policy rate in 2023. This time it was the Philadelphia Fed chief who said policymakers are likely to raise rates “well above” 4% and hold them at restrictive…
