|“I think the most likely outcome from here is we’re at peak Brexit, I think we’re past the most fear in the marketplace and we’re likely to recover from here, and people are starting to position themselves accordingly.”
Perpetual head of multi-asset investment strategy Matthew Sherwood said the markets may have become complacent after a poll shift in favour of the remain camp following the murder of British MP Jo Cox.
“A lot of people think this means that exit now won’t happen, but that suggests to me that markets have become somewhat complacent about Brexit risk as the outcome remains highly uncertain and the predictive power of UK polls is highly questionable,” he said.
The British pound had climbed to a 2016 high against the US dollar, rising more than 2 per cent, suggesting little risk premium was being priced into the markets of a win for the “Leave” campaign, he said.
“Investors need to prepare for its aftermath regardless of the outcome, which even if favourable will do little to lift global growth dynamics.”
The banks mostly enjoyed another day of buying, with the exception of National Australia Bank which fell 0.3 per cent to $25.67. Commonwealth Bank of Australia was the strongest performer, adding 1.2 per cent to $75.08. ANZ Banking Group rose 1.6 per cent to $24.25 and Westpac Banking Corporation added 0.7 per cent to $29.68.
“A number of the banks were in absolutely oversold territory by Friday last week,” Mr Sala Tenna said.
“A lack of bad news saw a bounce back from those oversold levels.”
The miners struggled, with BHP Billiton falling 1 per cent to $18.69, while Rio Tinto lost 1.3 per cent to $44.21. It came as BHP chief executive Andrew Mackenzie warned the global supply of mining commodities could drag on for another decade. Its spinoff South32 performed strongly, however, rising 4.1 per cent to $1.65.
In the other blue chips, Wesfarmers fell 0.1 per cent to $40.60, Woolworths lost 0.9 per cent to $21.19 and Telstra lost 0.4 per cent to $5.35.
Healthcare stocks, Monday’s weakest sector, recovered to be the day’s second best performer, rising 1.1 per cent behind industrials. CSL added 0.7 per cent to $108.89, Sonic Healthcare rose 2.16 per cent to $21.26 and Regis Healthcare added 6.3 per cent to $4.71 – the day’s best performing stock.
Conversely, the energy sector, Monday’s outperformer, proved the weakest, falling 1.4 per cent. Woodside Petroleum was the biggest drag on the index by weight, falling 3.5 per cent to $26.50.
In company news, APN News & Media shares fell 3.1 per cent to $4.75 after it confirmed it had sold its regional newspaper business to News Corp. That fall, however, followed a powerful surge in the company’s shares on Monday.
Gold and nickel miner Independence Group was the day’s weakest stock, falling 4 per cent to $3.14.