The ASX200 endured a week to remember, closing down -2.8% on concerns that interest rates will remain “higher for longer” and increasing concerns that the Middle East tensions will deteriorate further after Israel retaliated against Iran following last week's drone attack. It's hard to imagine an amicable conclusion to the current problems in the Middle East, but we all hope it doesn't become another painful, prolonged affair like the Ukraine–Russia war, which has now entered its 26th month.
The ASX200 edged higher last week even though eight of the eleven main sectors closed lower. The influential Resources Sector's strong performance allowed the local market to eke out a +0.2% gain, while the rate-sensitive Real Estate Sector led the declines, ending the week down -2.7%. Investors had to weigh up some very conflicting news flow on the US inflation front, with a strong CPI on Wednesday night denting hopes of three rate cuts before Christmas before a tame PPI soothed inflation concerns, which was helped by ongoing dovish commentary from a number of Fed officials, both past and present.
With so much conflicting data and rhetoric, it's not surprising that volatility is increasing. MM still believes global interest rates are set to fall through 2024/5; hence, we remain optimistic about equities. However, the ongoing speculation around the timing of these said cuts looks set to keep both investors and traders on their toes. We continue to believe stocks/sectors will dance to the “three steps forward, two steps back” tune over the coming months until the future path of rate moves by the RBA, Fed, et al. becomes set in stone. As we’ve pointed out a few times recently, every month of 2024 has delivered a 210-310 pullback for the ASX200, with an average of the last three pullbacks taking the index to ~7650.
The ASX advanced 1.3% last week, but it failed to follow US stocks to fresh all-time highs as the RBA ended the week on a far more hawkish footing than the Fed. The FOMC saw Jerome Powel confirm that the Fed is still looking to cut interest rates three times in 2024, whereas Michele Bullock isn’t discounting rate hikes following Australia's surprisingly strong employment data on Thursday. On Friday, the RBA delivered the sobering message that borrowers can cope with higher interest rates, which led some to suggest further hikes will follow in 2024: “Strong conditions in the labour market, the large savings buffers accumulated by many borrowers during the pandemic and rising house prices are helping households to adapt to challenging economic conditions,”.
The ASX endured a tough session on Friday, although the 1% recovery throughout the afternoon offered some hope for the bulls, with the “Big Four Banks” leading the bounce. For example, NAB and ANZ both reversed early steep losses of between 2.5% and 3% to end the session on their highs and in positive territory. However over the week, it was Macquarie’s downgrade of the banks and further weakness in iron ore names which weighed most on the index, which ended the tough 5-days down -2.25%.
The ASX surged to fresh all-time highs on Friday, taking the index up +1.3% for the week and 3.4% for the year, a solid performance considering some of the big names trading ex-dividend last week. The Financial and Real Estate Sectors led the index higher while the Energy and Materials names both slipped ~0.7%; as we’ve said a number of times in 2024, the relative performance song remains the same. On the stock level, the banks led the line with heavyweight CBA making fresh all-time highs assisted by the tailwind of the takeover bid for VUK, while real estate and gold also enjoyed strong weeks:
The ASX waved goodbye to reporting season at the end of last week and immediately focused on the new business at hand, making fresh all-time highs. Come Friday's close, the index had advanced +1.3% for the week, breaking clear of the psychological 7700 level in the process. The main movers on the stock level were related to the tail end of the reporting season, but there were noticeable strong moves from the ESG and tech stocks, which helped both the index and market sentiment.
Last week, the ASX200 was again dominated by the reporting seasons in both Australia and the US; while the broad index edged down just 15-points with plenty of well-known stocks signing off the week with double-digit gains or losses, led by American AI goliath Nvidia (NVDA US) which ended the shortened week up ~10%. It was a relatively quiet week on the economic front, with bonds taking a breather while the Tech Sector rallied +3.3%, aided by the Nvidia euphoria. Conversely, the consumer Staples tumbled -3.4% after the shock weak update from Woolies and the departure of the CEO.
The ASX200 ended a volatile week up just +14-points, or 0.2%, after impressively shrugging off some aggressive selling mid-week following strong US inflation data cast a shadow over when & how quickly the Fed will start cutting interest rates. Whether it is Australia, Japan or the US, the markets are still embracing signs of weak economic growth, with markets focused on when the cuts will be forthcoming.
The ASX200 ended a choppy week slightly lower, snapping a two-week winning streak even after three consecutive days of gains from Wednesday. The -0.7% dip over the five days was primarily caused by weakness in the Resources Sector, plus some disappointment after the RBA retained its tightening bias on Tuesday.
The ASX200 edged higher last week even though eight of the eleven main sectors closed lower. The influential Resources Sector's strong performance allowed the local market to eke out a +0.2% gain, while the rate-sensitive Real Estate Sector led the declines, ending the week down -2.7%. Investors had to weigh up some very conflicting news flow on the US inflation front, with a strong CPI on Wednesday night denting hopes of three rate cuts before Christmas before a tame PPI soothed inflation concerns, which was helped by ongoing dovish commentary from a number of Fed officials, both past and present.
With so much conflicting data and rhetoric, it's not surprising that volatility is increasing. MM still believes global interest rates are set to fall through 2024/5; hence, we remain optimistic about equities. However, the ongoing speculation around the timing of these said cuts looks set to keep both investors and traders on their toes. We continue to believe stocks/sectors will dance to the “three steps forward, two steps back” tune over the coming months until the future path of rate moves by the RBA, Fed, et al. becomes set in stone. As we’ve pointed out a few times recently, every month of 2024 has delivered a 210-310 pullback for the ASX200, with an average of the last three pullbacks taking the index to ~7650.
The ASX advanced 1.3% last week, but it failed to follow US stocks to fresh all-time highs as the RBA ended the week on a far more hawkish footing than the Fed. The FOMC saw Jerome Powel confirm that the Fed is still looking to cut interest rates three times in 2024, whereas Michele Bullock isn’t discounting rate hikes following Australia's surprisingly strong employment data on Thursday. On Friday, the RBA delivered the sobering message that borrowers can cope with higher interest rates, which led some to suggest further hikes will follow in 2024: “Strong conditions in the labour market, the large savings buffers accumulated by many borrowers during the pandemic and rising house prices are helping households to adapt to challenging economic conditions,”.
The ASX endured a tough session on Friday, although the 1% recovery throughout the afternoon offered some hope for the bulls, with the “Big Four Banks” leading the bounce. For example, NAB and ANZ both reversed early steep losses of between 2.5% and 3% to end the session on their highs and in positive territory. However over the week, it was Macquarie’s downgrade of the banks and further weakness in iron ore names which weighed most on the index, which ended the tough 5-days down -2.25%.
The ASX surged to fresh all-time highs on Friday, taking the index up +1.3% for the week and 3.4% for the year, a solid performance considering some of the big names trading ex-dividend last week. The Financial and Real Estate Sectors led the index higher while the Energy and Materials names both slipped ~0.7%; as we’ve said a number of times in 2024, the relative performance song remains the same. On the stock level, the banks led the line with heavyweight CBA making fresh all-time highs assisted by the tailwind of the takeover bid for VUK, while real estate and gold also enjoyed strong weeks:
The ASX waved goodbye to reporting season at the end of last week and immediately focused on the new business at hand, making fresh all-time highs. Come Friday's close, the index had advanced +1.3% for the week, breaking clear of the psychological 7700 level in the process. The main movers on the stock level were related to the tail end of the reporting season, but there were noticeable strong moves from the ESG and tech stocks, which helped both the index and market sentiment.
Last week, the ASX200 was again dominated by the reporting seasons in both Australia and the US; while the broad index edged down just 15-points with plenty of well-known stocks signing off the week with double-digit gains or losses, led by American AI goliath Nvidia (NVDA US) which ended the shortened week up ~10%. It was a relatively quiet week on the economic front, with bonds taking a breather while the Tech Sector rallied +3.3%, aided by the Nvidia euphoria. Conversely, the consumer Staples tumbled -3.4% after the shock weak update from Woolies and the departure of the CEO.
The ASX200 ended a volatile week up just +14-points, or 0.2%, after impressively shrugging off some aggressive selling mid-week following strong US inflation data cast a shadow over when & how quickly the Fed will start cutting interest rates. Whether it is Australia, Japan or the US, the markets are still embracing signs of weak economic growth, with markets focused on when the cuts will be forthcoming.
The ASX200 ended a choppy week slightly lower, snapping a two-week winning streak even after three consecutive days of gains from Wednesday. The -0.7% dip over the five days was primarily caused by weakness in the Resources Sector, plus some disappointment after the RBA retained its tightening bias on Tuesday.
