Category: Australia & NZ

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% six weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The OECD Composite Leading Indicator for China slipped further, to 98.54. Below 99.0 signals risk-off.

OECD Composite Leading Indicator

China’s NBS Manufacturing PMI is also slipping, falling to 49.0 in February. A decline below 49.0 would reinforce the OECD risk-off signal.

China: NBS Manufacturing PMI

Stock Pricing

ASX stock pricing declined to 86.04 percent with the market pull-back, from 88.61 percent last week. The August high was 92.23 percent, and the April low was 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

ASX stock market capitalization rose to 1.2 times nominal GDP in February, suggesting elevated valuations.

ASX Market Capitalization to GDP

Conclusion

The ASX bull-bear indicator at 56% signals a mild bear market, while stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

Australia Braces for Oil Shortages

Key Points

  • Australia has roughly one month of emergency reserves of petrol, diesel, and gasoline.
  • Iranian attacks will likely lead to supply shortages and steep price hikes in food, commodities, and air travel.

Brent crude futures (May ’26) are testing resistance at $85 per barrel. A breakout will likely offer a short-term target of $90.

Brent Crude

March 5 (Reuters) – More tankers came under attack in Gulf waters on Thursday as the U.S.–Iran war escalated, and Iranian drones entered ​Azerbaijan, threatening to spread the crisis to more oil producers in the region.

A Bahamas-flagged crude oil tanker was targeted by an Iranian ‌remote-controlled boat laden with explosives while anchored near Iraq’s Khor al Zubair port, according to initial assessments. A second tanker at anchor off Kuwait was taking on water and spilling oil after a large explosion on its port side.

Nine vessels have come under attack since the conflict broke out between the U.S., Israel and Iran on Saturday. Iran ​launched a wave of missiles at Israel early on Thursday and also sent drones into Azerbaijan, injuring four people.

….Around 200 ships, including oil and liquefied natural ​gas tankers as well as cargo ships, remained at anchor in open waters off the coast of major Gulf producers, according to Reuters estimates based ​on ship-tracking data from the MarineTraffic platform.

Hundreds of other vessels remained outside the Strait of Hormuz unable to reach ports, shipping data showed.

Australian ​Energy Minister Chris Bowen said on Tuesday that Australia has 36 days of petrol, 34 days of diesel, and 32 days of jet fuel in reserve. While Bowen stressed this was the highest level in more than a decade, it’s far below the International Energy Agency recommendation of 90 days.

Compare that to Japan, which is similarly reliant on crude oil from the Middle East and holds emergency oil reserves equivalent to 254 days of consumption. (Reuters)

Ongoing shortages caused by even partial closure of the Strait of Hormuz could lead to fuel rationing in Australia.

Major industries that are heavily reliant on diesel fuel include long-haul road transport, agriculture, and mining. Iron ore operations in the Pilbara region, a major earner of export revenue, alone consume hundreds of millions of liters of diesel each year. (Reuters)

The aviation industry is also vulnerable to fuel shortages. Jet fuel prices in Asia’s ​trading hub Singapore climbed to $225.44 a barrel on Wednesday, a record high.

The spot price of jet kerosene has now gained 140% since the close of $93.45 a barrel on February 27, the day before the United States and Israel launched an aerial bombing campaign against Iran.

The problem is that much of the oil shipped through the Strait of Hormuz is medium-sour crude, a grade prized for its higher yield of middle distillates such as jet kerosene and diesel.

Even if refiners can source alternative crudes from Africa or South America, these grades tend to be lighter and yield more light distillates such as gasoline and naphtha. (Reuters)

The Dow Jones Global Oil & Gas Index has climbed 20% since mid-January.

Dow Jones Global Oil & Gas Index

Conclusion

Japan and China have large emergency stockpiles of crude and LNG and can probably survive several months of supply interruptions.

India, Australia, and Europe do not have that luxury and will likely suffer from a steep spike in prices and possible fuel rationing if the Strait of Hormuz remains closed.

In Australia, we expect food prices to jump if the price of diesel, used in agriculture and long-haul freight, rises. Mining costs will also likely rise due to diesel shortages, driving up the cost of materials.

Global aviation is also vulnerable because of the steep rise in jet fuel prices.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% five weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Index continues its long-term decline relative to Gold (in Australian Dollars), indicating risk-off.

ASX 200 Index/Gold in AUD

Stock Pricing

ASX stock pricing increased to 88.61 percent from 87.41 percent last week, closer to the August high of 92.23 percent than the April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

The trimmed mean Forward PE ratio for the ASX 20 reached a new high of 20.87.

ASX 20 Trimmed Mean of Forward PE

Conclusion

The ASX bull-bear indicator at 56% signals a mild bear market, while stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% four weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index broke through resistance at 10,000, a strong bull signal indicating another primary advance.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing eased to 87.41 percent from 87.50 percent last week, compared to the August high of 92.23 percent and the April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

The trimmed mean Price-to-Sales ratio for the ASX 20 is climbing towards its 2021 high.

ASX 20 Trimmed Mean of Price-to-Sales

Conclusion

The ASX bull-bear indicator at 56% indicates a mild bear market, with signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% three weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index rallied strongly off support at 9000, confirming the primary uptrend.

ASX 200 Financials Index

Stock Pricing

ASX stock pricing increased to 87.50 percent from 84.90 percent last week, compared to the August high of 92.23 percent and the April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

Conclusion

The ASX bull-bear indicator at 56% indicates a mild bear market, with signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% three weeks ago. One of four Australian indicators and one of two Chinese indicators signal risk-off. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index respected support at 9000 and remains in a primary uptrend, indicating risk-on.

ASX 200 Financials Index

The OECD China Leading Composite Index declined to 98.8, the second month below the risk-off threshold of 99.0.

OECD: China Leading Composite Index

Stock Pricing

ASX stock pricing increased to 84.90 percent from 82.80 percent last week, compared to the August high of 92.23 percent and the April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

The ratio of ASX Stock Market Capitalisation to GDP increased to 1.19, which is 15.5% above the long-term average of 1.03.

ASX Stock Market Capitalisation/GDP

Conclusion

The ASX bull-bear indicator at 56% indicates a mild bear market, with signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

RBA Admits Its Mistake

Key Points

  • The RBA raised its cash rate target by 25 basis points to 3.85%.
  • The consumer price index jumped to 3.8% for the 12 months to December 2025.
  • The unemployment rate fell to a seasonally-adjusted 4.1%.
  • The ASX 200 found support at 8800.

The RBA increased its cash rate target by 25 basis points to 3.85%, citing stubborn inflationary pressures and a labor market that is “a little tight.”

The trimmed mean, the RBA’s preferred measure of underlying inflation, increased slightly to 3.3% for the 12 months to December 2025, up from 3.2% in November. However, a jump in the consumer price index to 3.8% from 3.4% in November spooked the central bank into a speedy reversal of its recent accommodative monetary policy.

Australian CPI & Trimmed Mean CPI

The 0.25% rate increase comes less than 12 months after the RBA commenced rate cuts on 19 February last year. The cumulative 75-basis-point rate-cut cycle is the shallowest in the past 35 years, an acknowledgment that it cut too soon.

RBA Cash Rate Target

The seasonally adjusted unemployment rate fell to 4.1% in December from 4.3% in November, indicating a tighter labor market.

Australia: Unemployment

The S&P Global Composite PMI for Australia jumped to 55.7 in January 2025, the highest level in more than 3 years.

S&P Global Composite PMI

Also, the ANZ-Indeed job ads average increased to 4.4% in January 2026, but remains in a long-term downtrend.

Australia: Job Ads

However, aggregate monthly hours worked grew by 1% over the 12 months to December 2025, suggesting low real GDP growth in the year ahead.

Australia: Aggregate Hours Worked

Over the same 12 months, credit and broad money grew at rates of 7.6% and 7.2%, respectively. The wide margin of more than 6.0% between credit/money growth and actual hours worked suggests strong underlying inflationary pressures.

Australia: Credit and Broad Money Growth

The ASX 200 shrugged off the rate increase, respect of support at 8800 signaling another test of 9000.

ASX 200 Index

The large ASX 200 Financials index indicates increased buyer interest, with a higher Trend Index trough.

ASX 200 Financials Index

The ASX 300 Metals & Mining index continues in a strong uptrend, and recovery above 8000 would indicate a fresh advance, with a short-term target of 8750.

ASX 300 Metals & Mining Index

Conclusion

The RBA faces a dilemma.

On the one hand, economic growth is slowing. Aggregate monthly hours worked grew just 1.0% in 2025, while real GDP growth slowed to 0.4% in the third quarter.

Australian Real GDP Growth

On the other hand, inflation is rising due to high government spending, loose monetary policy, and high immigration, crush-loading the housing rental market.

Hiking rates will further slow the economy, but the central bank is already late in tightening monetary policy and will need to hike aggressively to bring inflation back under control.

For now, the stock market shrugged off the rate increase. However, the RBA will need to inflict some pain to achieve its goal.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% two weeks ago, indicating a mild bear market. One of four Australian indicators signals risk-off, while one of two Chinese indicators does the same. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

NAB Forward Orders declined to -1 in December 2025, but the 3-month moving average remains above zero, indicating risk-on.

NAB Forward Orders Index

China’s NBS Manufacturing PMI slowed sharply to 49.3 from 50.1 in December, signaling a contraction. The NBS reading was well below the expected 50 but still above the risk-off threshold of 49.0.

China's NBS Manufacturing PMI

The latest reading signaled a loss of momentum in factory activity at the start of the year, as subdued demand conditions and cautious business sentiment continued to weigh amid ongoing structural headwinds. New orders slipped back into contraction (49.2 vs 50.8 in December), alongside a slowdown in output growth (50.6 vs 51.7). Foreign sales weakened further (47.8 vs 49.0), employment remained soft (48.1 vs 48.2), and purchasing activity declined sharply (48.7 vs 51.1). (National Bureau of Statistics of China)

Stock Pricing

ASX stock pricing increased to 82.80 percent from 82.40 percent last week, still roughly mid-range between the August high of 92.23 percent and the April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

Conclusion

The ASX bull-bear indicator at 56% indicates a mild bear market, with signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator remains at 56%, from 66% two weeks ago, indicating a mild bear market. One of four Australian indicators signals risk-off, while one of two Chinese indicators does the same. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator signals a mild bear market.

ASX Bull-Bear Market Indicator

The ASX 200 Financials Index continues to test support at 9000 after breaking below its 50-week moving average. A breach of support would signal reversal to a downtrend, indicating risk-off.

ASX 200 Financials Index (XFJ)

Stock Pricing

ASX stock pricing eased to 82.40 percent from 83.24 percent last week, still roughly mid-range between the August high of 92.23 percent and the April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

Conclusion

The ASX bull-bear indicator at 56% indicates a mild bear market, with signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating an elevated risk of a drawdown.

Acknowledgments

Posted on

ASX Market Snapshot

Bull-Bear Market Indicator
Stock Market Pricing Indicator

The gauge on the left indicates whether the market is in a bull or bear phase, while the one on the right reflects the current valuation of the stock market. Stock market pricing indicates whether stocks are cheap or expensive in relation to earnings, but it is a poor indicator of market timing. We do not recommend selling stocks when market valuations are high, but we advise caution when adding new positions.

Bull/Bear Market

The ASX Bull-Bear Market indicator fell to 56%, from 66% last week, indicating a mild bear market. Three of four Australian indicators signal a risk-on stance, while one of our two Chinese indicators has fallen to a risk-off signal. When combined with the US Bull/Bear indicator, which has a 40% weighting, the composite indicator has eased to 56%, signaling a mild bear market.

ASX Bull-Bear Market Indicator

The OECD Composite Leading Indicator for China declined to 98.96, below the 99.0 threshold, signaling risk-off.

OECD Composite Leading Indicator for China

Stock Pricing

ASX stock pricing jumped to 83.24 percent from 80.82 percent last week, still roughly mid-range between the August high of 92.23 percent and the April low of 67.85 percent.

ASX Stock Market Value Indicator

We use z-scores to measure each indicator’s current position relative to its historical data, with results expressed in standard deviations from the mean. We then calculate an average of the five readings and convert that to a percentile. The higher stock market prices are relative to their historical mean, the greater the risk of a sharp drawdown.

The All Ordinaries Dividend Yield is at a low 3.17% compared to its 45-year average of 4.09%, indicating that stocks are highly-priced.

All Ordinaries Dividend Yield

Conclusion

The ASX bull-bear indicator declined to 56%, signaling a mild bear market on signs that the Chinese economy is slowing. Stock market pricing remains extreme, indicating increased risk of a significant drawdown.

Acknowledgments

Powered by WordPress / WordPress Maintenance Service By Website Helper