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Note from the MD: Action-packed market shows no signs of slowing as holidays fast approach

Holiday season may be fast approaching but markets don’t look like they’ll be taking things easy even with only 15 days of trade left in 2021, including today.
Holiday season may be fast approaching but markets don’t look like they’ll be taking things easy even with only 15 days of trade left in 2021, including today. This week alone we’ve seen Bapcor’s CEO walk away from the company after a stoush with the board and Magellen’s chief executive step down for ‘personal reasons’ which the company has so far refused to explain. There’s been plenty to talk about outside these abrupt departures too, especially in the tech and resource sectors. Already today, technology investors will be considering how new payments legislation being put forward by Treasurer Josh Frydenberg will affect them, while ANZ is leveraging its new technology stack to offer financial coaching to customers through a system it claims will be able to approve home loans in 10 minutes.  Meanwhile in the resources sector, Oil Search and Santos have been granted merger approval by Papua New Guinea’s competition commission, Woodside has committed to invest US $5 billion into new energy technologies by 2030, and Nickel Mines has inked a deal to acquire a 70% stake in the Oracle Nickel Project, which includes four smelters in Indonesia. Fortunately, this kind of non-stop action is exactly what attracts people like us to trading in the first place. The XJO is looking as though some life is being breathed into it with a late afternoon rally yesterday and a strong opening this morning. The XJO is bouncing off it’s support around the 7200 level and is quickly trading away from the 200 day MA, both of which have acted as major support levels over the past 2 weeks.  If the market can hold price action above the 50 day MA today, we may see some consolidation over the coming days. If the market can break through 7465 before the end of the week we could see some further bullish price action and a potential new all-time high over the mid term. This all comes after the market notched up a 1% gain yesterday as fears around the newest COVID variant, Omicron, begin to subside – even the US’ top doctor, Dr Anthony Fauci, publicly downplayed the severity of this mutant strain of the virus. Similarly, Reserve Bank of Australia (RBA) Governor Philip Lowe said the Omicron variant is unlikely to derail the local economy, even if it does add a new source of uncertainty to markets. Those comments were made at the RBA monthly board meeting – the last one until February – where Lowe and co made the unsurprising decision to leave rates unchanged at 0.1%. There were no surprises in that speech, and the RBA’s view remains pretty much the same as it was last month, with the bank’s bond buying program expected to continue at its current rate until next year. Omicron turning out to be all bark and less-than-anticipated bite was great news for the travel sector at any rate – travel-exposed stocks rallied, with Flight Centre (ASX: FLT) and Corporate Travel’s (ASX: CTD) ~5.7% gains through trading yesterday standing out among the pack. Small and microcap stocks also did well yesterday, as risk appetite returns to markets. The Small Ordinaries index (ASX: XSO) put on 1.74% while the Emerging Companies index (ASX: XEC) lifted 2.23%. Both indexes continue to track upwards, with the XSO up 9.92% over the past 12 months while the XEC continues to soar, up 31.46% during that same period.  For those interested in resources, we have an IPO opportunity with Far East Gold – an Australian junior explorer led by some of the biggest names in Australian mining, including Nickel Mines’ MD Justin Werner. Far East Gold has secured the rights to 80-100% economic interest in 6 highly-prospective gold and copper projects across Indonesia and Australia, including one with a JORC resource estimate of 996,500 ounces of gold. We believe this will be a very sought-after investment. Click here to request the prospectus.
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