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Note from the MD: Markets up after raucous first week of new financial year

July 7, 2021

Note from the MD: Markets up after raucous first week of new financial year

Seven days into a new financial year and what a tumultuous week it’s been. 

Seven days into a new financial year and what a tumultuous week it’s been. 

The ASX 200 (ASX: XJO) has swung up and down to land roughly where it was at close last Wednesday, Sydney has extended its COVID lockdowns, and Sydney Airport shares jumped more than 30%.

The price of oil also briefly hit a six year high last night – keep in mind it was only just over a year ago, in April, the cost of a barrel dipped below zero as demand dried up and overstocked producers desperately looked to offload their wares.

A stronger US Greenback did slightly dent those prices – alongside those for nickel, aluminium, zinc, and other key commodities – but the small amount of pressure this has applied hasn’t dampened talk of an incoming commodities supercycle.

We have an upcoming multi-asset investment opportunity that aims to benefit from the global commodity supercycle. This Diversified Commodities Index is designed to take advantage of the global market’s megatrends and capitalise on the broad-based rally across metals and energy-linked assets.

Tomorrow at 1pm (AEST) we will be outlining our view on this new commodities supercycle, and discuss the driving forces behind inflation. Click here to attend.

Meanwhile, the Australian dollar seems to be headed lower as suspicion mounts that the central bank may want to keep the currency depressed in a bid to hit its wage growth and inflation targets.

It’s worth noting the RBA has struggled to hit its inflation targets in recent years.

Back to markets. With the XJO continuing to trade above the 50 day MA and below the 7400 level, and basically trading sideways since the 22nd of June 2021, this is an opportunity for some outperforming stocks or sectors to be seen. 

We see resistance for the XJO at 7400 and support at the 50 day MA (7186). Could be a good time for considering iron condor trades…

Tech names were among the stronger performers today, with the ASX 200 information technology index (ASX: AXIJ) putting on 2.82% through the day.

Buy-now-pay-later companies proved particularly buoyant, with Afterpay (ASX: APT) climbing 4.6% and Zip lifting 6.5%

Moving outside the XJO now, the Small Ordinaries index (ASX: XSO) lifted 0.89% through the day.

Big movers included wireless internet provider Uniti Group (ASX: UWL) which jumped 6.69% and mining contractor Maca Limited (ASX: MLD) which climbed 6.33%.

Three of the five biggest drops came from miners. Piedmont Lithium (ASX: PLL) dropped back 6.86%, Karoon Energy (ASX: KAR) lost 5.52% and Whitehaven Coal (ASX: WHC) dipped 3.76%.


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