Monthly Summary February 2019

Economy and Indices:

Markets are up +6% over the last month, coming off the back of a weak three month lead-up.

Leading industry groups:

1. Energy +15.5%

2. Industrials +11.1%

3. Metals and Mining + 10.8%

The only name to prevail in the top three from last month was the metal and mining group. Buoyed by stronger iron ore prices, lower, but now stabilised AUD and higher, now stabilised gold prices.

Unsurprisingly Energy and Industrials are both cyclical companies and would be expected to be within the leading groups in a strong month on the markets.

Bottom industry groups:

1. Property +3.3%

2. Financials +3.5%

3. Consumer Staples (Grocers) +4.3%

Financials have been weak performers with the Royal Commission and the final report which was announced last night.

Property and Grocers tend to be more defensive shares that are expected to lag the market in strong months like the last month.

Industry Sectors:

We have just started the February Reporting Season and expect to see more delineation within the market.

In context of the recent falls leading into this reporting season and the high PE (expensive) shares leading into this cycle, the expectations are high for bold moves as each company’s financials are announced

Segments (large, mid, small etc):

Last month’s textbook pattern for a falling market has been reversed this month.

The smallest companies have risen the most, and the largest hit the least – with the banking shares being the heaviest weight on the top end of the market.

Again, we would not expect to see much deviation from this pattern until the new driving economic forces, market leaders and thematics are established enough to identify apart from the overall market gyrations – or what many just call a ‘Bear Market’.