Viewpoint: Bullish
Precious metals have failed to live up to their reputation as a hedge against inflation with silver falling well over 20% from its 2022 high, weighed down by rising interest rates, a strong $US. However we believe there’s light at the end of the tunnel as small position traders are abandoning the precious metal ship on mass, this hot and generally less informed money has fallen to its lowest exposure to sliver in a number of years i.e. a bullish sign for MM.
UK stocks have struggled over the last few weeks but they remain within striking distance of multi-year highs, very different from most indices due to their relatively low tech exposure. Our preferred scenario is we see another test towards the 7500 area to afford a low risk/reward selling opportunity but around the current 7200 area it’s a coin toss and best played as an observer.
The ASX200 clearly remains very jittery as we saw over the 2nd half of last week, whether the reasoning is “if in doubt sell” or “sell all rallies” the net result has been the same i.e. the markets struggling to make any meaningful headway. On a forward P/E of just 12.6x, the market is now ‘cheap’ while looking at the total shareholder return (TSR) expectation, which adds the difference between…
Toll-road operator (TCL) has enjoyed solid support through 2022 as “risk off” names have flourished during the recent uncertain times and at this stage we see no reason to believe the outperformance will change with $15 looking likely before Christmas. The stock is currently forecast to yield more than 3% over the next 12 months which should add support to any dips below $14 but as has been the theme over the last year we will become cautious if / when the stock does pop to fresh post-COVID highs.
US stocks experienced a choppy session to end the awful quarter and first half, we still believe the probability is they will bounce through July but we cannot ignore the downtrend which has been in play since November 2021:
The ASX200 bode farewell to the financial year in the same bearish manner that’s dominated the last 2-months taking its decline for the tax rule-off period to -10.2%. Losses on the disappointing Thursday compounded through the day with the index closing down 2%, only 10% of the main board managed to close in positive territory but the fall wasn’t caused by tax-loss selling as many might…
As we mentioned earlier the Australian gold stocks have endured a tough 2022 with all of the big names retreating while gold is basically unchanged. The precious metal has so far failed to deliver during a period of rising uncertainty & inflation, a backdrop that would normally be regarded as its bread and butter but surging bond yields and a strong $US have offset these moves leaving gold…
US stocks had a very quiet night as they approach the end of a very tough quarter, we still believe the probability is they will bounce through July but further potholes appear likely as we head towards Christmas:
STA +6.06%: Strandline has announced that open-pit mining at the Coburn Mineral Sands Project will commence two months early, and with an initial strip ratio of just 0.5x, down from previous 0.7x estimates. The company also notes that the project remains on-budget. In a world where cost inflation and project delays are commonplace, this is a good outcome for the junior mineral sands player.
OZL +1.08% : Peter O’Connor upgrading OZL today to a buy on valuation grounds, saying: Earnings updated for guidance update (27 June 2022) including lower production and higher unit costs, West Musgrave start-up (pushed back one year) and tweaks to capex and D&A, (ii) Target price multiple to NPV lower from 1.25x to 1.1x and (iii) Rating Upgrade to BUY from HOLD on valuation…
