It's Monday the 15th of September. Today, ten weeks into the new financial year, with a volatile earnings season behind us, the make-up of Australia’s top 20 companies has changed sharply. The Big Switch from banks to resources companies and healthcare stocks has evolved into a sell down of Commonwealth Bank and CSL and buying up of resource companies. At the same time, after years of underperformance, Coles is closing in on Woolworths in terms of market capitalisation.

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News in brief

The federal government had pledged $12 billion towards building AUKUS infrastructure in Western Australia – a move which should help Australia’s standing with US President Donald Trump.

The spring selling season continues to gather momentum, with 2,455 homes taken to auction last week, the highest volume since the first week of June. The preliminary clearance rate has eased off a little through the first two weeks of spring but at 74.8 per cent it is still high.

Almost half of Australian investors are now turning to artificial intelligence for financial advice, according to the preliminary findings of the Australian Retail Investor Confidence survey from Chartered Accountants ANZ. 

It is a very big week for the US Federal Reserve with interest rates in the world’s biggest economy likely to be cut, which would certainly please Donald Trump.

Danish drug giant Novo Nordisk will cut 9,000 jobs globally and has downgraded its profit forecast, as the maker of Ozempic and Wegovy struggles to fend off copycat drug manufacturers and retain market share.

Fear-o-meter

US President John F Kennedy popularised the aphorism “a rising tide lifts all boats” when describing economic growth. It used to be an apt description for investing in Australia’s big sectors - the big banks, the miners, and retailers. That’s because they all did pretty much the same thing and rose and fell more on macroeconomic factors than fundamentals of the individual businesses.

But it is no longer the case. Since the beginning of this financial year, which includes an earnings season, Commonwealth Bank has lost 12 per cent in value while Westpac and ANZ have jumped around ten per cent.

Coles’ share price is up 14 per cent while Woolworth’s price is down 10 per cent. Fortescue Metals is up 25 per cent, outperforming BHP (13 per cent) and Rio Tinto (7 per cent).

The $3.2 trillion ASX has become a stock-picker's market. The top 20 stocks now account for more than 50 per cent of the market capitalisation. Management and valuations matter more than ever before. Investors need to appreciate that if they are to maximise equity returns.

Fear & Greed Q+A today

All about the week ahead, including Australian labour force numbers, and whether the Fed will cut rates:

 

"It looks like it [will]. We know the [US] labour market's weakening. The unemployment rate in the US has gone up. Employment growth is very weak. So not dissimilar to here. And the Fed has paused for the last... six or eight months. They haven't moved rates lower because they've been worried about tariffs. They've been worried about inflation just lingering a little bit higher than they would like to see it.

 

But that labour market number... there will be a cut. So probably a 25 point cut. As we say, a dovish cut, because when we look at the futures market right now, they've got... another four rate cuts priced in over the next six to 12 months. So we'll get 25 this week and probably another 75 after that over the course of the next nine to 12 months."

Greed-o-meter

Here are the top ten companies on the ASX, based on market cap. As mentioned in our top story, there have been some big changes in just the first ten weeks of the new financial year.

Source: Market Index

Fear & Greed on location

This morning's show was recorded with Michael Thompson in the Australian studio... and Sean Aylmer in Marrakech. Listen to the episode, and see if you can hear the finches of Morocco in the background.

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