ASX soars on trade war and housing crash

AUD is still weak through the morning:

Bonds are selling:

XJO to the moon!

Dalian is firm in the hope for Chinese stimulus even as the PBOC crunches CNY:

Big Iron is off a bit but nothing like ADRs:

Big Gas is getting the treatment:

Big Gold is again up on AUD over AU:

Big Mortgage is ripping:

Big Realty meh:

For a country on the receiving end of the trade war and a housing correction there sure is some hope in the ASX bid.

Bad news is good news!

Comments

  1. Trump needs to hit China with something harder. The Chinese markets have barely lost anything with latest tariffs while CNY has fallen, almost neutralizing their effect while imposing a similar levy on US exports.

    I suggest a blanket tariff on all Chinese goods, rising at 5% every month until demands are met and adjusted to account for currency depreciation.

  2. IMO no coincidence the market rallying against tightening credit and falling house prices. All that superannuation money that has been funding the housing bubble needs to find a new home.

  3. No I think you are not looking at it incorrectly
    Key points
    ASX is liquid
    It pays the best yield of any investment now in australia
    The asset value of the ASX is globally based in USD so when AUD falls in USD terms a rise in ASX is the same global USD value
    There is very little leverage in ASX
    Market is underweight ASX
    The majority are bearish ASX
    Aussie companies are not too indebted
    When other bourses in Asia are sold off, ASX hardly budges lower

    Honestly I don’t think it’s even a big call to say 7,000 to 8,000 ASX over next year
    Buy good sell off, it’s the only place in Straya that will have any return in next 2 years except maybe bonds but you have tro trust that BS lying politicians to pay you back.
    The only reason i trust them is because they have low debt and will need to issue a huge amount of debt over the next 5 years to cushion the deleveraging of private/household sector over the next few years

    I am not calling but if AUD goes to 45c in 3 years time and the Australian 10 year bond is 1.50% when cash rate is 0.25% and you get 0.50% on a TD, ASX could go to 10,000 in this cycle. You may laugh at me, but it’s very plausible.

    • sydboy007MEMBER

      This banks and resource companies will get canned. Nothing much of consequence left in the ASX. Aldi will continue to retire profits for the Coolies duopoly. Telstra mobile has to aggressively cut it’s margins to stop too many moving to TPG.

      • Miners and energy are only supported by oscillating commodity prices and cost cutting there’s no real growth there, most are divesting operations. The long term trajectory of commodity prices is down in my opinion though plenty of rallies along the way.
        Banks are in trouble longer term, they are going to bounce around a bit when yields become irresistible, but again there’s no growth more likely the opposite.
        CSL the only growth story of any size, but PE of 45 high expectations baked in. Some potential in ALL, should probably try position itself as a tech.
        TLS another could bounce on divs, but in long term decline, possibly terminal, its a bit of a dinosaur.

        Other than that mostly a sad and sorry bunch of domestic oligopolies, mostly bond proxies that will drift about with yields. ASX itself may eventually wither and die as many of the better issues with global operations (e.g. WFD) get bought out and those with global ambitions (e.g. Atlassian) choose to list elsewhere. They missed a chance to merge with Singapore which would have made things much more interesting.

        I used to be an avid follower of small caps, haven’t had the time lately. Perhaps I am missing some hidden gems?

      • @Dan – Have a look at Titomic – TTT. Speculatitive but may have some growth potential. Another CSIRO spin off.
        Not invested – but looking at taking a small spec position.