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Note from the MD: Markets off to strong start in March despite floods and war

March 2, 2022

Note from the MD: Markets off to strong start in March despite floods and war

The Australian market has enjoyed a healthy start to March, closing out trade yesterday up 47.4 points (0.67%), with the tech sector contributing a lot of heavy lifting – up 5.7% by day’s end.

The Australian market has enjoyed a healthy start to March, closing out trade yesterday up 47.4 points (0.67%), with the tech sector contributing a lot of heavy lifting – up 5.7% by day’s end.

Telecommunications and industrials also played a not-insignificant role in the day’s performance, up 1.5% and 1.3% respectively, but there were also decent showings from financials, health care and energy. 

The Aussie market has spent the last week bouncing from support at 7000 and trading towards resistance around 7130. The market tested resistance during yesterday’s session and saw the sellers re-enter the market. 

We will be watching for price action near 7000 over the short term. Implied volatility levels are still high as geopolitical tensions control the headlines and the market pulls back from all-time highs. If the market drops below 7000 in the coming days, we may see a quick sell-off towards 6750 (as we saw on 27th January this year).

Interest rates have predictably stayed flat at 0.1%, but Reserve Bank governor Philip Lowe flagged something new in this month’s comments: That Russia’s invasion of Ukraine has created a new well of uncertainty for markets to ponder over.

Lowe added that the fighting has pushed up the price of commodities. Meanwhile, the Federal Government has signalled it could be willing to cut off trade with Russia entirely, depending on how the Kremlin handles the next phase of this war.

I won’t devote too much more time to the Russian invasion; I’m sure we’re all following the same news stories and are all too aware of the tragedy playing out in Europe right now, but I think we can all admire the tenacity of the Ukrainian people in the face of this adversity. 

Closer to home, Mike Cannon-Brookes’ surprise bid for AGL is continuing to grab headlines ahead of further negotiations. 

Earlier this week, it was reported that VanEck would consider accepting an offer for the energy company but the money on the table would need to be more than the initial price of $7.50 a share.

With the United Nations warning Australia could see more floods like those currently sweeping across parts of Queensland and NSW unless action is taken to combat climate change, I suspect these sorts of boardroom battles will continue to take up significant airtime.

And speaking of boardrooms, interim reporting season has come to a close and it looks like corporate Australia has bolstered its cash supply – significantly, too.

CommSec data shows aggregate cash holdings grew 60% during the last half-year, with cash holdings now of $210 billion, giving businesses plenty of money to play with as the recovery continues to gather pace.

We have an upcoming webinar with a company that is moving the cancer conversation from ‘fight’ to ‘cure’.

Prescient Therapeutics (ASX: PTX) is a biotech innovator and pioneer who, with its next-generation CAR-T platform OmniCAR and targeted therapies, is leading the charge in the fastest-growing area in cancer treatments. Tomorrow, Thursday 3rd March at 1pm (AEDT), we will be joined by Prescient Therapeutics CEO and managing director Steven Yatomi-Clarke to discuss the company’s pipeline and catalysts for the upcoming year. This will be a fascinating conversation for potential investors. Click here to attend

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