Viewpoint: Bullish
Over recent weeks US indices have been smacked as bond yields have turned higher with the tech names again standing out on the downside e.g. the NASDAQ has fallen almost -15% from last month’s swing high. Interestingly on Friday, we saw the NASDAQ reverse aggressive early losses to only close down –0.55%, near its intra-day high. We believe this downside move is tiring and while the FOMC will undoubtedly bring with it some…
The ASX200 is set to open basically unchanged this morning with the Feds FOMC decision looming large on Wednesday US time, after falling almost 6% from its August high we believe the risk/reward has swung around in favour of the buyers – the ASX has outperformed the tech-heavy S&P500 which has fallen more than 11% over the same period.
US stocks slipped lower again last night as the second-guessing around the Fed’s hiking path continues and bond yields continuing to edge higher e.g. the 2-years are now trading above 3.85%. Remember we need bad news and uncertainty to create market lows which is what MM is looking for through September & October, the pivot point may be close at hand – only a month ago investors were getting bullish as stocks rallied strongly through early August.
Minerals sands & rare earths newbie ILU has held above $10 even after paying a 25c fully franked dividend earlier in the month. Further consolidation around $10 wouldn’t surprise but after its strong half-year result in late August we feel a charge towards $12 is on the cards once the market overcomes its ongoing bond market jitters.
WDS traded ex-dividend $US1.09 fully franked last week but encouragingly it continues to push towards fresh 3-year highs, as we alluded to earlier a great result considering crude oil is ~25% below its May high. At this stage, we remain bullish looking for another ~10% upside unless severe recession concerns raise their head again.
The ASX200 managed to reclaim a little lost ground yesterday but the bounce was very unconvincing with almost 60% of the main board closing in negative territory – fortunately, the influential banks enjoyed a solid day which offset the more broad-based losses. Elsewhere the Energy Sector continued to defy gravity rallying another +3.7% with all 10 stocks closing up on the day, an impressive performance considering crude oil is still languishing ~25% below its June high.
IGL -0.82%: Yesterday the company announced they had bought the majority of the printing and finishing assets of Ovato from the administrators. Ovato had previously been a major competitor and at one point they were doing $500m in revenues, however a bunch of factors sent them down the gurgler. Their demise cements IGL as the number 1 player in the…
SHV +13.24%: the almond grower rallied to 3-month highs today following a better-than-expected crop update. 80% of the 2022 crop has been processed, with 722% sold at a strong price of $6.75/kg. They’ve also forecast 30kt for the 2023 crop after securing the minimum level of bee hives required. While this is a slight downgrade, the market was positioned for worse with a short position of around 4% heading into the update. We suspect shares will be supported given the major risk is now less of a concern.
US stocks failed to make any meaningful recovery from the previous sessions’ broad-based heavy declines, the tech-based NASDAQ bounced over +0.8% while the Dow recovered a mere 30-points of yesterday’s almost 1300-point plunge.
The ASX200 was clobbered over -2.5% yesterday wiping over $60bn from the local index following steep losses on Wall Street after Tuesday’s US CPI demonstrated that inflation remains stubbornly high. Waking up to a 1300-point rout on Wall Street is enough to scare any investor but we should consider the previous few sessions before throwing the baby out with the proverbial bathwater:
