Global Markets Overview

End of the quarter

Based on the close of the futures from Saturday, the market is currently pointing higher by around six to eight points, which would mean the ASX could register a 0.4% gain for the quarter.

However, I think the most likely outcome at the close of business today is that the ASX will more than likely be nearer to 5350 than 5370, making the quarter a zero sum game for fund managers.

What has been interesting is how each sector has responded to what was the worst start to a year (January month) by the ASX since 2010, and the worst start to a February since 2008, as the January lull followed through to the first week of trade (for the S&P it was the worst start to a February since 1933). March, as always, was hit by dividend payment and the Chinese Luna New Year slowdown concerns.

The interesting breakdown of ASX sectors shows a very similar picture of muted quarterly trading. The energy space is off 0.8% for the quarter; a weaker AUD and increased production from the likes of Oil Search and Woodside, plus Santos' record revenue boosted numbers in February, however both WPL and STO had disappointment littered throughout their reports and WPL's Leviathan issues coupled with STO's poor 'here and now' story have dragged.

On the flip side is the materials space; it is up 2.3% and is the leading sector for the quarter. That will surprise many considering the fluctuations seen in commodity prices, the rising AUD in the first-half of the year and the fact that the sector's biggest client China is revealing it is slowing down. Chinese demand is under a question; there is a possibility of market dumping as it emerged that as much as 60% to 80% of copper and 30% of iron ore stockpiles in Chinese ports are under collateral agreements. What is clear is the materials space is falling into the close of the quarter, after having been up as much as 12.05% only three weeks ago, as gold snaps out of a relief rally and the AUD reaches four-and-half month highs.

On the defensive side of the ledger, the story is of similar fashion. Telecommunications is the worst performing sector, falling 3.1% for the quarter as Telstra still hasn't recovered from going ex-dividend in February. The company is facing the issue of market saturation, with growth expected to be between 4% to 6% and reported growth of 4.1% in the first half of the year. TLS looks like it may find $5.25 to $5.30 a very strong resistance level as returns look thin at these levels without further backing.

Financials are up 2.2% for the quarter, particularly driven by the likes of MQG which is up 4.8% and almost 60% in the last 52 weeks; QBE has registered an almost 10% gain for the quarter as the big four bumble along. CBA has lost 0.9%, however it posted a record half-year profit and has paid out its first-half dividend, while ANZ, NAB and WBC are all in the green for the quarter. WBC was the stand out, up 6.3% year-to-date, as it heads into its first-half reports come the end of April start of May.

The moves in consumer staples and consumer discretionaries are almost mirror images, both losing 1.5%. Despite the talk of M&A between David Jones and Myer, Primer investments and Kathmandu registering a very solid reports and retail sales having a bumper January, discretionary stocks are lagging the market down 1.55%. This isn't surprising considering the discretionary space was the leading sector in 2013. Staples are in a similar vein, both WES and WOW had typical results, both beating consensus in core business, with Coles and Woolworths seeing good like-for-like numbers. However, both have fallen in peripheral staples, with WES still unable to see changes as the struggling Target and WOW's plunge into home improvements are still causing headaches as Masters profit plans get pushed out to FY16 and FY17.

So, although there is a zero sum game for the index, the sectors have moved on specific issues. With the close of the quarter likely to see the closing out of quarterly positions, the sectors are likely to trade in-line with their quarterly developments; do not be surprised to see irregular and sporadic trade based on minimal news.

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