There was the MSCI global index rebalancing that took place last night, as discussed elsewhere here this morning, and overnight the US PCE Price index number was in line with expectations. The month-on-month number was slightly better than expected. Bond yields dropped a touch. The chance of a US rate cut in September rose from 50.5% to 53.2% apparently. The Dow Jones closed up 575 points (+1.51%), the NASDAQ was down -0.01% (so basically flat) and the S&P 500 closed up +0.8%. The Dow Jones bounced back thanks to a +7.54% recovery in Salesforce which had dropped -19.7% the day before. Salesforce just happens to be one of those 30 Dow Jones stocks; it's a very concentrated index. Otherwise the technology sector was held back by a -17.9% drop in Dell on the back of lowered quarterly guidance. According to Marcus Padley's Saturday email this morning our SPI Futures is +38, which suggests we may open in positive territory on Monday.
He also suggested that the old "Sell in May and Go Away" advice from decades ago hasn't been holding up so well in recent years and didn't apply so much this year either. It's an interesting time of the year - some call it confession season - which is where there is a blackout period where companies do not engage much with the market ahead of their June 30 results, however we do tend to get a smattering of downgrades and a couple of upgrades when companies realise that their numbers are a fair way from market consensus and that the market needs to be updated about a more accurate range of possible outcomes. I tend to give these guidance updates a fair bit of consideration before acting on them, rather than assume that any downgraded guidance by a company I was generally bullish on was automatically a buying opportunity - it isn't always - sometimes it's a wake-up call that your investment thesis might need to be revisited/reviewed.
Anyway, Monday is the first trading day of the last month of the financial year, so we should expect tax loss selling throughout the next 4 weeks, and that COULD potentially present some good opportunities, IF we have done our homework and know the good opportunities from the capital killers.
