After a couple of flat weeks, the XJO had a positive week, largely led by gains of 0.63% on Monday and 0.71% on Tuesday. 

The markets were buoyed after less hawkish comments from US Fed chairman, Jerome Powell at the Jackson Hole Symposium on Friday, saying they will ‘proceed carefully’ with regards to interest rates. 

On Tuesday, miners propelled the XJO forward even more, off the back of higher commodity prices. Mining and consumer discretionary shares were the biggest gainers, rising 1.6% and 1.4%, respectively. 

Today, the XJO has again opened higher, trading up around 7260 at 10:30 this morning. Over the last five days, the index has gained around 1.5% and is currently just over 4% off of its 52-week high of 7,567. Top sectors include Consumer Discretionary (+3.6%), Financials (+1.21%) and A-REIT (+1.08%), while Utilities is down just over 1%. Overall, 9 out of 11 sectors of the XJO are in the green. 

There is opportunity in the micro and small-cap space too, with the Small Cap Index (XSO) up almost 0.5%, currently sitting around 2,828. 

In local economic news, the Consumer Price Index (CPI) indicator for July is due today, which will indicate where inflation is at, including statistics about prices for categories of household expenditure.  A speech by the RBA’s Michelle Bullock yesterday evening also indicated that climate change risk is ‘acute’, which could affect the ‘neutral interest rate’ and the ‘stance of Monetary Policy’ overall. 

In U.S. markets, Wall Street had its third consecutive winning session as investors made up some ground at the end of August. The tech-heavy Nasdaq Composite led the charge overnight, rising 1.7% in the session to finish at 13,943. The S&P 500 (up 1.5%) and Dow Jones Industrial (up 0.9%) also finished higher, with the S&P 500 notching its best performance since June, closing at 4,497. 

These wins came despite data signalling the economy could be slowing. There was a drop in U.S. job openings for July, combined with a Conference Board consumer sentiment index which came in at 106.1, under the consensus estimate of 116. 

Meanwhile, the 2-year Treasury yield dropped on Tuesday too. While all of these factors could indicate a cooling economy, this may give markets some hope that the U.S. Federal Reserve could lighten its policy stance on interest rates. 

One fund manager that has extensive experience operating a long-only investment strategy that focuses on ASX-listed small and micro cap companies is Luke Winchester.

Luke will be joining us this Friday 1st of September at 12pm (AEST) for “The Insider: Meet the Fund Manager” webcast, where he will explain how he identifies profitable companies that have clear growth prospects that haven’t really been understood by the market.  To join us for this session, click here.

You should only act on the information we provide if you are confident that you fully understand what you are doing. Past returns do not always indicate future returns, and it is also possible to make significant losses. There is always a risk of loss when investing.

Reach refers to Reach Financial Group Pty Ltd (ABN 17 090 611 680) that holds Australian Financial Services Licence (AFSL) 333297 and to its related entities and Corporate Authorised Representatives (CAR) Reach Markets Pty Ltd (ABN 36 145 312 232) (CAR No: 431191) and Reach Corporate Pty Ltd (ABN 76 638 960 540) (CAR No:1281636). Reach offers investment opportunities for self-directed investors; you need to have the experience and capabilities to analyse the investment and make your own decision that it is suitable for you. Contact Reach on 1300 805 795, (03) 8080 5795, admin@reachmarkets.com.au or visit www.reachmarkets.com.au for further details.