Australia
Lots to talk about in this note.
Building approvals
Firstly, macro data out; building approvals. Quite strong, both by volume, below…
…and by value. This is something of a surprise, but good for building products, materials, retailers and banks, really all the pointy pro-cyclical parts of the market.
Housing finance
That’s all very positive, however we are inclined to weight the housing finance data more heavily, in which the slowdown from prior, elevated peaks continues.
The decision by the RBA to hike by quite a dovish amount (25 bps, see next section) however, could well stabilise this data moving forwards.
RBA decision
Which brings us to the hike itself.
You can see it took the market quite by surprise, ourselves included. A strong open given US markets was expected, but the announcement effect itself is very visible.
Risky assets up, long duration sectors (property) up and dollar down are fairly unambiguous, when paired with a lower 10 year bond rate.
Sectors
Many of the longer duration mining companies rallied on the back of the dovish statement, with gold companies featuring prominently below. We own NCM, just outside of the list below, but IT, retail, materials and financials all doing well.
And the laggards are the typically more defensive names, such as AZJ, COL, CSL, WOW.
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