The ASX 200 hit fresh all-time highs of 7733.2 points this morning, before pulling back around midday then rallying into the afternoon. The benchmark index is trading 0.56% higher just after 3pm to finish the week on a strong note.
The record high on the local market follows the S&P 500 and Nasdaq post record closing highs overnight.
The Materials and Tech sectors outperformed today, while Healthcare and Telcos were in the red.
Lithium miners were strong as the benchmark lithium futures price in China extended a week-long rebound. Pilbara Minerals is up 4.3% and IGO Ltd is up 3.5%.
Life360 was a standout today, gaining more than 37% after raising its revenue guidance to US$375 million in 2024 and reduced its loss to US$28.1 million in 2023. The consumer tech company operates free and paid versions of a location-tracking app used by families that can monitor everything from where children are to how fast they are driving.
A volatile season
The majority of companies have published earnings reports and it seems the number of winners and losers among ASX 200 companies are evenly split.
The ASX 200 gained just 0.2% in February, narrowly extending a four-month winning streak. However, volatility was skyhigh with 36% of companies moving more than 5% on the ASX following their results — the highest level on record and in excess of the 35% seen in August 2020, according to JPM.
Chief investment officer of Solaris Investment Management, Michael Bell, noted there had been a lot of trading activity among fund managers this season.
“It’s been a flattish month, but you still had massive volatility from individual stocks when results came out, and that’s generally as a result of where positioning is in companies,” he said.
“There’s lots of asset allocation going into our market: there’s all the hedge funds who are shorting the market as well as offshore money coming in.”
AI and Technology power global earnings
A market insight report from State Street (NYSE:STT) Global Advisors’ Bruce Apted highlighted AI and Technology stocks as the dominant themes globally in 2024.
“AI has been a dominate theme in 2023 and so far in 2024 this theme has continued to underpin positive earnings revisions across global markets. Without the positive earnings trends from AI and Technology companies the global markets would have seen negative earnings revisions in 2024 so far.”
He noted that the global communications sector has also seen upgrades (of 3.1%) since the start of the year after seeing positive revisions of 20.5% in 2023.
“Similarly, Technology and Discretionary had powerful earnings revisions in 2023 and have seen further upgrades in 2024.
In contrast, this year “we have seen negative trends from almost every other sector with Energy seeing the biggest negative revisions.”
The report also noted that a sanguine trend remains for the broader Australia market. Apted’s observations of the ASX 300 this reporting season include:
- The largest earnings upgrades have been observed in Technology where over the course of the February reporting season analysts have upgraded earnings estimates by +5.2% for the next 12 months (Note the negative trend in 2023).
- Utilities, Industrials and Discretionary have also seen positive improvements in the earnings expectations for the next 12 months.
- In contrast the Energy, Communications and Materials sectors have seen the largest downgrades.
- The contrast between the Australian and global communications sector is largely due the different make up of stocks – AI has yet to move the dial for large cap Australian communications.
- Financials faced headwinds in 2023 and have only seen very minor positive upgrades in 2024.
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