The alternatives sector is unique in that it’s largely defined by what it’s not. Accordingly, how you fit alternatives within your existing asset class structure will depend on relativity, and how the investments interact with the other asset classes according to Atchison’s Kev Toohey.
The private markets juggernaut is one that has also thrown up a wealth of data that other players can use to sharpen up due diligence when making their own investment decisions – especially in the growing secondaries market.
Local market (ASX:XJO) gains 1.1 per cent on Friday, AGL surges on upgrade
The local sharemarket delivered a fifth straight day of gains on Friday, finishing 1.1 per cent higher on the back of a strong rally in the energy sector. The sector finished 3.5 per cent higher, buoyed by the likes of Woodside (ASX:WDS) and Santos (ASX:STO), which finished 3.5 and 4.1 per cent higher. But all eyes were on AGL Energy (AX:AGL) with the new board delivering a significant upgrade to earnings expectations which sent the share price 9.7 per cent higher. The driver was a more upbeat outlook for earnings to finish between $1.3 and $1.375 billion, along with a near 20 per cent upgrade to profit expectations. The key driver was sustained higher energy prices and continued strength in production.
US markets fall, but gain for the weak on rate pause, Adobe Inc. flat despite record revenue
All three US markets finished lower on Friday, led by the Nasdaq which fell 0.7 per cent. The S&P500 and Dow Jones both fell, down 0.4 and 0.3 per cent respectively, but managed strong gains for the week up 1.2, 2.6 and 3.2 per cent. The key driver was the unexpected pause in rate hikes by the Federal Reserve and confirmation that sharemarkets had entered a new bull market. It may be clear that the end of the hiking cycle is nearing, however, an earnings slowdown remains a significant risk. On the positive, May inflation data showed the CPI falling to a year on year rate of just 4 per cent, the lowest since March 2021. Shares in Adobe (NYSE:ADBE) were broadly flat despite the company reporting record quarterly revenue of US$4.82 billion and forecasting strong sales in the current quarter.
Pricing power, Japanese policy, banking deals grow
As the technology sector sprints higher all across the world, the reasons were clear to see on Friday, after shares in Xero (ASX:XRO) rallied close to 2 per cent on news that the company’s recent decision to pass on higher costs to customers may benefit the bottom line more than expected. This reflects the significant pricing power of some of the world’s strongest technology and software companies. The Suncorp-Bank of Queensland deal remains on after the merging entity was able to sell off it’s banking arm with ANZ Bank (ASX:ANZ), the eventual buyer. The divergence in economic policy also continues to grow, with the Bank of Japan changing little in its latets policy meeting suggesting it is waiting for more ‘sustainable’ inflation, rather than following the rest of the developed world with aggressive rate hikes.
