The Monday Report – 30 January 2023

Daily Market Reports | Jan 30 2023

By Greg Peel

Still Happy New Year

Both of the traders who were forced to turn up to work on Friday, when no one else did, decided to keep the New Year momentum going. While the ASX200 banged around in a 40 point range on low volume, the eventual 25 point gain was basically the mean.

The bottom line was a case of just about all sectors up, again, with energy down -1.8%. Energy’s fall was all about thermal coal prices, which may be showing signs of peaking (although it wouldn’t be the first time), following an unseasonably warm European winter. At least until now.

New Hope Corp ((NHC)) fell -9.0%, Whitehaven Coal ((WHC)) -6.6% and Coronado Resources ((CRN)) -2.4%. The top five losers included a couple of gold miners and a lithium miner, but materials netted out to a flat close.

The only other weak sectors were healthcare (-0.3%) and utilities (-0.1%). We could argue that defensives had their run last year and following the lead from Wall Street, cyclicals and growth are back in fashion. True enough, except that staples rose 1.2% on Friday to be the best performing sector. So go figure.

I’d suggest that Wednesday’s CPI data, which showed a dip in food inflation, probably helped. Grocers typically like food inflation, but not so much that we all switch to gruel.

The comeback kids continue to be technology (+1.2%) and real estate (+1.1%), despite the two saps who turned up to trade bonds on Friday pushing the ten-year yield up 5 points to 3.55%.

The banks were the biggest winners on the day in index points terms in rising 1.0%. The chorus is nevertheless beginning to grow that the banks will post excellent results to their March year-ends (and Commonwealth Bank ((CBA)) when it reports next month) and then it will all be over.

Friday marked the fourth positive weekly close for the index this month (and this year!), following the same performance on Wall Street. Friday night on Wall Street saw some fairly definitive late selling, on the last Friday of a very solid month, ahead of a Fed meeting.

While our futures were up 12 points on Saturday morning, a bit of end-of-month profit-taking over the next two sessions would be of little surprise.

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