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Weekly Brief Sheet - 23/05/22

Provides a market round up, a selection of useful data points we use for our investment analysis, and some interesting articles/charts we have noticed recently.

Wall Street continued its weekly losing streak as fears grew that inflation was causing consumers to pull back on discretionary spending, setting the stage for a coming recession.

At its low point on Friday, the S&P 500 Index was down roughly 20.9% from its January intraday high, exceeding the 20% threshold for a bear market and placing it back at levels last seen in February 2021.

The metric of note is market activity which is surprisingly subdued, with trading volumes more than 10% below recent 20-day averages and below every day of the previous week.

Disappointing earnings and revenue results from several of the nation’s major retailers appeared to spill over into negative broader sentiment. Most dramatically, shares in Target fell roughly 25% after earnings fell short of estimates by nearly a third, which the company attributed to a combination of reduced sales of discretionary items, such as televisions, and higher costs.

Results from Walmart, Lowe’s, and Home Depot also fell short of expectations—while Costco shares may have tumbled in part on rumours that it was raising the price of its popular café hot dog.

The local market shook off a weak lead from Wall Street, and extended gains after China reduced the five-year loan prime rate by an unexpected 15 basis points to 4.45 per cent.

The announcement triggered a spike in metals and iron ore prices, supporting ASX-listed miners. BHP added 2.1 per cent to $47.18, Rio Tinto firmed 1.5 per cent to $108.35, and Fortescue climbed 3.9 per cent to $20.15.

The technology sector rallied 4.6 per cent, led by a 21.1 per cent leap by Life360 to $3.89 after it reaffirmed revenue and earnings guidance at its annual general meeting on Friday.

Over the weekend markets gained certainty on the next 4 years of Australian government, with a large mandate to tackle climate, inequality, housing affordability and cost of living will likely move sector over/underweighting at the large asset managers over the next month as the priorities of the Albanese regime become more apparent.



Misc. Topical Charts:

Inflation Adjusted Oil price (WTI)

Sectors & Stocks:

Bonds & Fixed Income:




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