Investor Sentiment Survey
Bullish sentiment has slid for four straight weeks, dropping from 39.5% for the week ended 12 April to 29.7% this week.
Over the next three months, do you expect the Australian stock market to be:
Bullish
Neutral
* Bearish
Miners vs. the World
The ASX 200 is down just 1.2% for the year, yet it feels like 10-15% to most investors. But when you look at the sector breakdown, it's essentially miners vs. the world.
Materials make up ~27% of the index, and without BHP, Rio Tinto and Fortescue doing the heavy lifting, the headline number would probably be, down 10-15%.
Energy is the best performing sector of the year, but it only makes up ~3% of the index.
BHP at All-Time Highs
BHP recorded three consecutive all-time highs this week and pushed through the $60 level for the first time on record. Copper also hit a fresh all-time high of US$6.6/lb, while iron ore continues to trade around the US$110 a tonne level.
Some of my favourite readings about the commodity complex this week has come from Regal's Charlie Aitken.
"My strategy remains that the combination of the AI hyperscaler capex super cycle, the defence spending super cycle, the debasement of the US Dollar ... and no supply response of any note, means all the required elements are in place for an extended commodity price super cycle."
"Arguably the best large cap way to express this is being underweight highly leveraged domestic mortgage banks and overweight resources. There is clearly a scenario building where BHP (and friends) dominate the ASX200 for the next two years. It’s happened before, and it can easily happen again."
"BHP pointed out that if spot commodity prices only held current levels, that cumulative free cash flow over the next 5 years would be double the current consensus estimate."
CBA’s Worst Selloff on Record
CBA took a 10.4% dive on Wednesday, recording its worst one-day selloff since listing in 1992. The decline was slightly worse than the pandemic (down 10.0% on 16-Mar-20) and GFC (down 9.0% on 18-Dec-08).
The selloff was driven by CBA's Q3 result, which missed expectations on flat revenue growth and higher provisions flagged against macro headwinds. The bank's CET1 ratio fell 70 bps to 11.6%, raising questions among analysts about capital adequacy and limiting upside for greater shareholder returns. The federal budget may have also enticed some long-term shareholders to hit the sell button.
Unlike the major drawdowns of recent history, driven by the Dotcom bubble, the GFC and the pandemic, this one has no obvious crisis-level catalyst. Those episodes, for all their pain, created solid medium-term buying opportunities.
The question now is whether this is different. Against a backdrop of no CGT relief, minimal earnings growth, property market headwinds and an elevated valuation, this could mark the beginning of a de-rating for CBA.
Bapcor Oblivion
Bapcor was already down 67% year-to-date heading into this week, having completed a massively dilutive $200 million raise at a 65% discount back in February. On Thursday, it issued yet another earnings downgrade. I know right – how can it get THAT bad.
The key highlights from the announcement include:
FY26 underlying EBITDA (pre-AASB16) cut to $62-68m vs prior A$74-79m, a 15% reduction at the midpoint
"Softer trading conditions in April continuing through to the end of FY26 driven by lower business confidence and consumer sentiment."
* Current conditions could give rise to a non-cash impairment, to be assessed at financial year end
Bapcor finished the session down 18.5%, and fell a further ~4% on Friday. At least the YTD figure edged only a little lower, now (-76%).
Last week we flagged several retailers, including Accent, Endeavour, JB Hi-Fi and Super Retail Group, all pointing to late March as a clear inflection point where trading conditions began to deteriorate. It's interesting to see more names step up, with the exact same messaging.
Last Laughts
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