Weekly Brief Sheet - 27/06/22

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.


asset class performance comparison

Signs that inflation might be moderating as growth cooled helped stocks rally sharply over the holiday-shortened week, lifting the S&P 500 Index out of bear market territory. Nearly every sector in the index recorded strong gains (as well as the ASX).

Energy stocks were the notable exception, as oil continued to back off from its recent highs over most of the week.

The week’s economic data offered several signals that the Federal Reserve’s forceful turn toward monetary tightening was having the intended effect of slowing the economy and moderating inflation.

The Chicago Federal Reserve also reported that its gauge of national economic activity had reached an eight-month low. On Thursday, S&P Global’s index of June manufacturing activity came in well below forecasts (52.4 versus roughly 56), while its services gauge also missed estimates and hit its lowest level since January.

With the end of the quarter at hand, the rebalancing of portfolios is underway and it promises to be a doozy. With equity prices having taken a beating lately, there is an estimated $100 billion that needs to be pumped back into the market.

This is one of the larger rebalancing's to hit markets in awhile and it could have some unintended consequences. International equities are actually faring quite well in comparison and are expected to see inflows of around $59 billion.

Bonds, on the other hand, are expected to see some selling as investors look to move into more growth-oriented assets. With dealer gamma already negative, there is potential for some serious price swings in the coming days.

Australian shares are poised to begin the week with a bang, taking direction from a broad rally in New York and expectations that there is room to run into the end of the month, quarter and first half of 2022.

ASX futures were up 103 points or 1.59 per cent to 6573 yesterday & the local currency was up, within reach of US69.50¢.

Also in small cap news last week, Micro-cap ($32m) financial advice business Diverger (ASX:DVR) has launched $64m cash-scrip takeover bid for rival micro-cap ($43m) Centrepoint Alliance (ASX: CAF) which if successful will create a circa $100m entity that will benefit from much greater operational scale.

Diverger is pitching its offer at 32.5 cents per Centrepoint share, a 30% premium to the target’s last close price at 22 June. Centrepoint’s shareholders can opt to either receive the offer price of 32.5 cents in cash or shares in Diverger as part of an evenly split 'mix and match' facility. The default consideration offered to shareholders comprises a 16.25 cents per share in cash consideration and 16.25 cents per share in Diverger scrip.


Links:

Night Moves: Is the Overnight Drift the Grandmother of All Market Anomalies
Climate change scenarios are looking somewhat better
Wintergatan - Marble Machine (music instrument using 2000 marbles)
UK Inflation Rises to New 40-Year High With More Gains Expected
 

Misc. Topical Charts:


bear markets length
Last three bear markets compared to latest
developed markets over last 3 months
defensive shares for recession

fed balance sheet
Quantitative tightening looking more like flattening. What happens when they actually start reducing?


Sectors & Stocks:

asx sector performance
SP500 sector performance

Bonds & Fixed Income:

Australia government yield curves
US government yield curve

Commodities:

base precious metal returns
energy resources returns

Currencies:

Australian dollar performance

 

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