Market movements

Headlines

A high level lookback at market movements over the past month. Note, this is a “summary only” note, our more detailed notes are left to other updates.

Multi-asset

A stronger month across May, recovering from the April sell-off. International shares, of all styles (Growth, Value, Quality) performed well. US PCE coming in at consensus, alongside the Chicago PMI, arguably rescued the month for fixed income (as yields fell on the more agreeable numbers) and led to modest gains on average.

At a slightly more detailed level (incorporating active managers either of interest or in the funds) we see a decent month for property, infrastructure and select small caps, pockets of the market we think are either very cheap (smalls, property) or have a reasonable set of thematic tailwinds (infrastructure, climate change related capex).

Equities

By regional market, the NVIDIA results saw a strong recovery for the NASDAQ, and a breather for China, after a strong 6 month (driven by “the national team”, promoting China as a better/more-stable place for foreign investment).

In the local market, IT, Utilities and financials outperformed (the banks continued to enjoy market support post the May bank results season; buybacks and special dividends/capital returns were well regarded, even as the broader profits were quite ordinary). Teleco’s underperformed, with several listed teleco’s (SPK, TLS) downgrading guidance, and consumer stocks struggled with a similarly downbeat set of trading updates (BBN, MHJ, TRS).

Direct

At the stock level AWC enjoyed a recovery in alumina/bauxite/aluminium prices on production restarts, S32 similarly (plus the manganese shortfall due to the cyclone related damage to port infrastructure). ALL tabled a strong set of results, with competition from international peers proving less material than previously expected.

At the other end, Fletcher’s downgraded (very weak NZ macro impacting building/development) and so did JHX (James Hardie) citing a globally difficult housing backdrop (due to higher interest rates reducing housing turnover). In our view, the downgrades domestically are only just beginning, given restrictive monetary policy, weak retail sales, and challenged cyclicals (building approvals, construction work done).

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

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