Since the emergence of “Modern Portfolio Theory” and the “Capital Asset Pricing Model” in the late 1960s, institutional investors have taken a quantitatively driven approach to portfolio construction, looking to create portfolio diversification and obtain better risk-adjusted returns by balancing their asset-class exposures. This journey has seen several important advancements in thinking about how to optimally achieve desired results.
Funds that want to take the total portfolio approach first need to get the total portfolio view. To do that they not only need data – and lots of it – but a rock-solid understanding of exactly how they’re going to use it.
Aussie market absorbs energy woes
Energy shares sank on Monday, with Woodside among the worst hit, after the lower house passed an emission reduction plan in a deal with the Greens.
Energy’s woes dampened the market, but the benchmark S&P/ASX 200 index managed to add 6.8 points, or 0.1 per cent, to 6962, while the broader All Ordinaries advanced 6.2 points, also 0.1 per cent to 7,143.8.
Under the government’s “Safeguard Mechanism” legislation, set to take effect on July 1, gas projects such as Woodside’s proposed Browse field would have to include carbon capture and storage to achieve net zero. Unsurprisingly, energy was the worst sectoral performer, falling 2.3 per cent, with Woodside Energy leading the sector lower, down $1.09, or 3.4 per cent, to $31.47. Fellow producer Santos slid 11 cents, or 1.6 per cent, to $6.74; Beach Energy lost 4 cents, or 3 per cent, to $1.28; and Tamboran Resources, which is developing a gas project in the Beetaloo Basin, sank 1.5 cents, or 6.7 per cent, to 21 cents.
Coal miners also did not enjoy the new legislation. Whitehaven Coal shed 10 cents, or 1.5 per cent to $6.38; New Hope fell 7 cents, or 1.3 per cent, to $5.42; and Bowen Coking Coal lost 0.5 cents, or 2.2 per cent, to 22 cents; but Stanmore Resources fought back against type, advancing 4 cents, or 1.2 per cent, to $3.41.
In lithium, Allkem eased 3 cents, or 0.3 per cent, to $10.14, and fellow producer Pilbara Mineral retreated 12 cents, or 3.4 per cent, to $3.44. Mineral Resources, which mines iron ore as well as lithium, lost 80 cents, or 1 per cent, to $76.41, and IGO, which produces lithium and nickel, eked out a 2-cent gain to $11.98.Project developer Lake Resources was clobbered 6.5 cents lower, or 13.5 per cent, to 42 cents, on news that its non-executive chairman has sold a $3.9 million parcel of shares; but peer Liontown Resources managed a 3.5 cent gain, or 2.4 per cent, to $1.52.
Among the big bulk miners, BHP Group gave up 9 cents, or 0.2 per cent, to $43.55; Rio Tinto slid 68 cents, or 0.6 per cent, to $113.75; and Fortescue Metals closed unchanged at $20.32.
The utility sector was the biggest gainer, rising 2.2 per cent as Origin Energy rose 25 cents, or 3.2 per cent, to $8.17, on the back of reports that Brookfield and EIG Partners’ $18.2 billion takeover offer for Australia’s biggest utility could be finalised this week.
Latitude loses altitude
Non-bank lender Latitude Financial lost a further 3 cents, or 2.5 per cent, to $1.18 after announcing that the cyberattack it suffered earlier this month is now one of the largest data breaches in Australian history, and is more than 40 times bigger than the company initially reported. Nearly 8 million driver licence numbers of Australian and New Zealand customers and applicants had been stolen. Shares in Latitude slumped 7 per cent following the initial announcement, but has recovered all that and more, to be up 12.4 per cent since then.
In the big banks, Westpac gained 3 cents, to $21.23 and National Australia Bank was up 23 cents, or 0.9 per cent, to $27.41, but ANZ was down 8 cents, or 0.4 per cent, to $22.44, and Commonwealth Bank was down 77 cents, or 0.8 per cent, to $95.07.
Biotech heavyweight CSL added 45 cents, or 0.2 per cent, to $288.94.
US puts its best foot forward
In the US, investors are doing their best to move on from the March turmoil, with the blue-chip Dow Jones Industrial Average gaining 194.6 points, or 0.6 per cent, to 32,432.1; and the broader S&P 500 adding 6.5 points, to 3,977.53; but the tech-heavy Nasdaq Composite index conceded 55.1 points, or 0.5 per cent, to 11,768.84. European markets were mostly higher.
On the US bond markets, the 10-year Treasury yield gained 16.1 basis points, to 3.539 per cent, while the more rate-sensitive lifted 23.1 basis points, back above 4 per cent at 4.008 per cent.
On the commodities front, Gold eased US$19.33, or 1 per cent, to US$1,956.40 an ounce, the global benchmark Brent crude oil grade surged US$3.17, or 4.2 per cent, to US$78.16 a barrel, and US West Texas Intermediate spiked US$3.55, or 5.1 per cent, to US$72.81 a barrel.
The Australian dollar is buying 66.47 US cents this morning, down from 66.61 US cents at the local close on Monday.
