The ASX fell as expected today, shedding a nominal 0.36% or 25.3 points to 7,122.80.
Consumer Discretionary was the only sector to make an impact with a lift of around 1.22% today, although Energy and Materials also managed small gains.
Consumer Staples led the market down, shedding 1.32%. The sector has been the worst performing this year, shedding 10.28% in that period.
Last week, Healthcare and Energy performed the best, both just in the green, while Real Estate trailed just under the line. The worst performing sectors for the last five days were Materials, down over 5%, followed by Financials with a 3% loss and Industrials down over 2%.
Looking at commodities, platinum group elements and critical minerals platinum and palladium made strong gains today, adding 2.82% and 2.15% respectively, and West Texas Crude followed suit with a 1.67% lift.
Aluminium and zinc suffered, however, falling 1.13% and 1.03% as the other metals – precious and base – remained mostly unchanged.
Reporting season is challenging
Wealth Within chief analyst Dale Gillham discusses the ASX reporting season and what the market movements might mean looking forward.
“Right now, the Australian stock market is in the middle of reporting season with companies sharing their full-year results,” Gillham said.
“While it provides investors with insights into a company's financial health, it can also be a very challenging time for investors, as stock prices tend to be very volatile.
“In some cases, despite announcing record profits some companies fall heavily while those that announce record losses rise.
“It all comes down to the expectations from the big end of town and whether the company has missed expectations.
“In other words, if the big end of town believes a company’s profit should have been higher, they may sell the stock.
“Similarly, if the loss was less than they were expecting, they may buy. Confused? You are not alone, many investors find reporting season very confusing.
Navigation tips
Gillham recommends skipping the angst – reporting season is more for the big end of town anyway, your time would be better served with a holiday or a good book.
“That said, some investors treat reporting season as a critical period that they need to pay attention to,” He explained.
“So, here are my tips for navigating reporting season successfully.
“You need to know when reporting season starts and ends, and the dates the reports will be released for the companies you are interested in.
“In analysing the results, it’s a good idea to compare this year's results with the prior year, as well as other companies in the sector. Once you’ve analysed the reports, you can decide which stocks you want to buy or sell based on the results.
“Remember, analysts can have biased opinions, therefore, you need to set realistic expectations based on their views and do your own research.
“As I always say, short-term fluctuations in price as a result of reporting season are largely irrelevant and should be ignored because the longer-term trend is more important.
“While it can be very enticing to purchase a stock that is rising strongly in the short term for FOMO, this can lead to poor returns after reporting season ends.
“That’s why it pays to wait until after the volatility of reporting season ends to review your portfolio and the companies you are interested in buying because you’re less likely to get caught up in the emotions of the market.”
What’s next for the market?
“This year has been a constant battle between the bulls and bears because just when we thought one would be more dominant, everything switches,” Gillham said.
“Right now, the All Ordinaries Index is currently up just under 2% for the year, which is very disappointing considering we have experienced three periods this year where the market has risen around 7% over multiple weeks.
“The market has also had three periods where it has fallen, one of which we are currently experiencing.
“We are 32 weeks into the calendar year and in that time the All Ordinaries Index has closed higher than it opened for the week 15 times, while it has closed lower than it opened 17 times.
“This is why I continue to say that the market is lacking confidence, which leads to unpredictability and why we need to be cautious.
“In last week’s report, I mentioned that it would not be surprising if the All Ordinaries Index fell away for a few weeks, and to be prepared in the event it did.
“Of course, the week’s performance has validated my concerns.
“Right now, the market could fall for another one or two weeks before it turns to rise again. That said, as we continue to experience, anything is possible in the current market conditions, so it’s wise to expect further falls.
“For now, good luck and good trading.”
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