Changing of the guard. Why I think Australian and China facing shares could outperform the US in Q4. Six considerations
US Fed chair indicating further smaller rate cuts are ahead. While China’s market sees is biggest one day gain since 2008. Here is the daily.
The S&P 500 rose for four straight quarters, adding $2.5 trillion in the September quarter. However, the Aussie share market outperformed, rising 6.5% compared to the S&P 500’s 5.5% gain. With Fed chair Jerome Powell indicating no rush for further rate cuts, traders now expect around 1.4% in US rate cuts over the year. The question is, could we see the Aussie market outperforming the US in the upcoming quarter? So here are six things to consider
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Firstly – hedge funds are facing margin calls after China’s market rose 8.5% yesterday, its biggest one-day gain since 2008. So stocks exposed to China could also see sizeable wild moves to upside.
Secondly - The Aussie share seems to be breaking out higher. Today the ASX200 is lower amid profit taking, which is natural. But October, November December are traditionally months for the market.But institutional moves could flow to Australia’s market which is tipped to be a major beneficiary of on China’s V-shape growth recovery.
Third - watch iron ore stocks. Iron ore price is up 20% in five days, up 8.5% yesterday with Commodity prices to probably search for higher ground despite Chinese markets being on holiday for a week.
Fourth- consider that global institutions have continued to buy into S&P500 ETFs in the September quarter like they almost always do. But now in close second place are Chinese-facings ETFs. This tells us global investors are now buying more China stocks like never before. And they're buying Chinese ETFs more than US-tech stocks, in the QQQQ ETFs for example. So you need to watch Chinese ETFs like iShares MSCI China ETF $iShares MSCI China ETF (MCHI.US)$, the Invesco China Tech ETF $Invesco China Technology ETF (CQQQ.US)$ the leverage ETF Direxion Daily China bull ETF $Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$
Five - Watch for earnings growth and stock upgrades. In China facing stocks. Watch not just BHP, Rio and Forestcue who make most of their money from China. But consider lithium stocks that could be upgraded with lithium prices seeming have found a new bottom as lithium demand is lithium to increase. So the supply deficit that is expected to hit markets in 2027, 2029 is probably going to be brought forward. So worth watching stocks like Min Res. Its shares are up 41% in five days as its earnings from iron ore and lithium are expected to grow in 2025.
Six- Australia building approvals are on watch todayand are expected to pull back following July’s 10.4% rise. The bottom line is consumer, who is borrowing to build is strong and this is supports Australia’s economic growth story. So watch stocks like Brickworks and Johns Lyng which have gained 9% in 5 days
For more watch read Monday's write up.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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Moomoo Official Market Strategist
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Moon fairy 大炮仙 ❤ :
151453268 witso : Hey Jess, how many times did you say china it is potentially a good outlook for any china relevant stocks lets see what can happen on the oz market. Like you’re Blue dress by the way, was a little bit worried you had been involved in a knife fight glad you’re ok.
