1 April 2019
Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, two are ‘red’ and three
‘amber’. The cyclical positioning has been classified as ‘downswing’ with
global growth decelerating, a loss of output momentum in China, the largest
national user of metal, and less supportive monetary policy settings than
have prevailed for most of the post-2009 period.
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Market Directions
Equity markets put aside concerns about a yield curve inversion to push
higher in a continuation of the market recovery precipitated by the Federal
Reserve policy pivot in January. Metal prices have held their ground despite
concerns among investors about slowing global growth, including signals from
the bond market implying weakening activity. Apparently contradictory
pressures in metal markets and financial markets leave metal prices at some
risk of a downside move to match the implied financial market outlook.
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Portfolio Performance and Positioning
Established producers generally performed better than exploration
companies for the fourth consecutive month in March. The portfolio outcomes
reflected this general trend. Movements among Phase II companies led up
moves and down moves suggesting some willingness among investors to engage
with this section of the market to reassess and to punish for disappointing
results. After several portfolio changes at the beginning of March to
reflect relative performance outcomes, no further changes have been made.
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Stock Reviews and Rating Analysis
PortfolioDirect rating reports analyse the quality and risk
attributes of proposed mineral developments. Rating criteria apply to mining and oil and gas stocks at any stage of
development. PortfolioDirect uses a five point rating
scale to measure the risk adjusted quality of proposed mineral developments
or companies.
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The 'Steak or Sizzle' blog provides summary judgements on
the top performing ASX-listed resources stocks.
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