Reporting season is well underway and already we’re seeing interesting news breaking out – Macquarie has delivered a record quarter and Suncorp’s future looks bright despite its insurance arm suffering a spot of hail damage.

All eyes were on the two companies following the announcements and both notched up respectable gains during trade, joining broad-based upward momentum across the ASX 200, which left only two sectors – tech and consumer staples – nursing wounds.

Tech’s losses – exemplified by Appen (ASX: APX) and Block (ASX: SQ2), which both lost over 6% – come amid heightened speculation that markets are rotating away from growth-style companies into value stocks.

The XJO opened 50 points higher this morning with broad gains across the banks, healthcare, retail, insurance, transport, telecommunication, real estate, staples and even tech – which is looking brighter this morning. 

Pharma, energy, diversified financials and consumer services saw some red on the open. 

The market broke through the 7200 resistance level, hinting that the market may be back to trading the 7200 to 7465 range over the mid term. We see current resistance around the 50-day and 200-day MAs (7298 and 7330).

In other news, consumer confidence took a small tumble last week as fears of higher interest rates began to hit home with consumers.

Even so, the data suggests Australian consumers are still broadly neutral rather than exceedingly pessimistic – and spending appeared to climb through the week, too.

Businesses, on the other hand, are feeling more optimistic about their situation, with National Australia Bank’s most recent business confidence index (January 2022) squaring away its equal fourth largest increase on record.

This business buoyancy has come despite business conditions deteriorating slightly through the month and purchasing costs hitting record levels – another product of the strong, persistent inflation we’ve seen of late.

While I’m not one for crystal ball gazing when it comes to inflation and interest rates, I also wouldn’t be entirely surprised to see the cash rate lifted this year.

The rapid push towards full employment also helps make the case for a raise, with Prime Minister Scott Morrison even suggesting we could see the unemployment rate dip below 4%.

With significantly more jobs being advertised at the present than were back in February 2020, when the pandemic started to take root, there’s certainly demand for workers.

Exactly what to make of all this is difficult to say, but from our perspective it’s just more fuel for the rotation into value names.

One investor who is always on the hunt for new opportunities that don’t seem to grab the market attention they deserve is Martin Pretty, founding director and investment manager at Equitable Investors.

Martin will be joining us this Friday, 11th February, at 12pm (AEDT) for our The Insider: Meet the Fund Manager webcast, where he’ll provide insights into his strategy for finding businesses with fundamental growth cases. He’ll also discuss some of the key stocks in his portfolio that could be well placed to navigate the current economic environment. To join us for this session, click here.