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In her monthly review, Julia discusses:

  • Stocks with double digit overperformance and underperformance (0:50)
  • Aged care and the Royal Commission: 3 key areas to focus on (1:27)
  • Is this bull market coming to and end? Look out for these signals… (2:28)
  • No signs of market stress yet (3:29)

For the month of September the market was trading down lower with a fall of around about 2% and there wasn’t a huge difference between the major indices all returning similar results.

In terms of sectors, only 3 sectors managed a gain including energy, materials and communications, whilst the worst were healthcare, down 7.9%, discretionary, down 5.2% and utilities, down 3.7%.

Top ASX200 performers:

  • Northern Star up 22%
  • South 32 up 12.5%
  • Vocus up 11.8%

Bottom ASX200 performers:

  • Lynas down 27%
  • Estia Health down by 22%
  • Blackmores down 17%

Aged care and the Royal Commission – 3 areas of focus for investors:

  1. Quality: increasing education, audits and ratios
  2. Framework: Aged care quality standards
  3. Funding: need for capital investment

With a loss for the month of September, the market is focusing on possible turning signs that this secular bull market may be coming to an end. Usually from an economic standpoint this is when we move from rising inflation and rising growth, to rising inflation and slowing growth. We’re also watching to see whether peak earnings growth has already passed especially in the US and at the number of companies participating in the rise decreasing. Some other things harder to time include the yield curve flattening, market breadth narrowing, the move from growth to value and growth looking to move below trend.

However the market is not under stress yet. Having a look at the ASX200 volatility index, which generally shows that when we have low volatility the market tends to grind higher. We currently are experiencing low volatility with the XVI index at just 11.1%, showing no signs of stress for the market.

Looking ahead to October it looks like we may be treading water. The big event in the next couple of months will be the midterm elections in the US early November. We’ll be watching these very closely and their likely impact on the timing of potential talks between trade partners, especially the US and China.