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Morning Market Wrap: Optimism Returns to Stocks

9 Sep 2019
By
The ASX 200 rallied yesterday, finishing the day up 0.92% and US stocks had a second strong session in a row last night . . .

Global

US stocks had a second strong session in a row last night, opening higher, trading up for the next hour and then remaining at this level for the rest of the session. The Dow Jones finished up 1.41% and the S&P 500 1.30%. Market optimism has hit a high point after the US and China have reportedly agreed to sit down in October to discuss trade. The UK’s FTSE 100 declined overnight, possibly due to a fairly substantial rally in the pound verses the US dollar over the past three days.

ASX

The ASX 200 rallied yesterday, finishing the day up 0.92% on the back of the rally in US stocks the prior day. This is a one month high and represents a breakout from the trading range that has persisted since the early August declines. Consumer staples was the best performing sector, climbing 2.3%. Many economists still believe the Reserve Bank of Australia will need to further cut interest rates to stave off a domestic slowdown. The ANZ Bank, for example, expects the cash rate to fall to a low of 0.25%.

Commodities & Currencies

Gold prices fell sharply on the improved sentiment with the US dollar price falling 2% ($32) to $1,517 per ounce. This, combined with the strong AUD, brought the Aussie dollar price down to a two week low of $2,228 per ounce. Oil prices, on the other hand, benefited from a larger than expected draw down in US inventories, as well as a slight drop in US production. This pushed WTI oil up to $57.50 per barrel although the price completely retraced this rally to finish virtually unchanged over the past 24 hours. The market continues to price oil based on the expectation of a future surplus despite the current tight market.

The spot price of gold is currently down 2.1% at US$1,518 per ounce.

The AUD is currently up 0.27% at US$0.681.

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ASX Value StrategyS&P/ASX 200 Accum Index
ConstructionTen stocks of the best quality stocks selected from the ASX 200 indexFree-float-adjusted market cap weighted comprising 200 of largest ASX stocks
ManagementRebalanced once per month on the 5th of the monthRebalanced four times per year according to market cap and liquidity
Annual Avg. Return*16.4% per annum, before fees8.4% per annum, before fees
Worst 12-month Return*-42% (Feb-08 to Feb-09)-40% (Nov-07 to Nov-08)
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