What happened in markets over the Christmas break
Markets never sleep and over the Christmas period and the first few weeks of 2019, we’ve certainly seen some big volatility play out. With many fund managers and traders away over the period, markets move on light volume with small bits and pieces of information having a bigger impact than they generally would. Over the period of 24 December to 11 January, the local market rose an impressive 5.11%, with all sectors of the market moving higher. Overseas markets also rebounded after trading at long term lows around the middle of December. - The Dow Jones Industrial Average (US: DJAI) fell over -9% but since Christmas Eve, it has bounced back +10.8%. - The UK FTSE index shows a similar, but less volatile tune, falling -3.88% in December, but is up 4.1% since the break. - The MSCI Emerging Markets index has gained 5.1% in the past 3 weeks, while it fell 2.92% in the last month of 2018. The global rebound was lead by energy as Oil turned a corner, bouncing back from its aggressive selloff beginning in October on news that OPEC would work to cut production, as well as global growth fears subsiding and the story was no different locally.
Sector Performance 24/12/2018 to 11/01/2019
Source; Bloomberg
Both tech and healthcare names also moved higher – two sectors MarketMatters were overweight heading into the Christmas period. While still showing positive returns in the last 3-weeks, the safe havens of consumer staples & real estate underperformed the index during the period.
At a stock level, the heavily shorted Syrah Resources (ASX: SYR) was strong after production of graphite kicked off in their US facility. Healius (ASX: HLS) – the old Primary Healthcare (old code was ASX: PRY) rallied strongly following a bid from Hong Kong’s Jangho for $3.25/sh. The board rejected the “opportunistic” bid, however the stock held most of the bump. Other names in the top 10 mostly consist of energy and tech stocks carried higher as risk on came back on the table following the December sell off.
Stock moves 24/12/2018 to 11/01/2019
Source; Bloomberg
On the other end of the spectrum, Costa Group’s Avocado’s and berries have seen sliding demand leading to falling wholesale prices causing the company to release a profit warning. The stock fell 38.8% on the day – a huge move relative to the downgrade. Other stocks languishing at the bottom had no company news and mostly consisted of the retail sector which by many reports had a poor Christmas trading period. This is a sector we’ll discuss in more detail as the week progresses.
All in all, a difficult period in markets over the Christmas break and as the week unfolds we’ll get a better feel for likely trends moving forward.
