Why stocks from these 3 sectors are rallying to 52-week highs

Welcome back to the 52-week Series – a recap of ASX 200 stocks marking yearly highs and lows in the past week.

# Highs and lows by sector

• Materials – 4 highs, 1 low

• Discretionary – 6 highs, 0 lows

• Energy – 1 high, 0 lows

• Financials – 0 highs, 0 lows

• Healthcare – 1 high, 0 lows

• Industrials – 2 highs, 0 lows

• Real Estate – 0 highs, 7 lows

• Staples – 2 highs, 0 lows

• Technology – 4 highs, 0 lows

• Utilities – 0 highs, 0 lows

Stocks Making 52-week Highs

Key themes and takeaways:

• Building materials stocks have been marking consistent fresh 52-week highs since late June and further bolstered by recent earnings from Boral and James Hardie.

• Rotation into early cycle sectors says Macquarie: "Based on share price reactions recently, the market seems to want to rotate to early cycle sectors such as Building Materials and Retail as slowing inflation and the RBA pause seem to support positioning for a soft landing."

• Technology stocks have rallied on the back of AI hype but they're also delivering against expectations, with solid results from Carsales, Life360 and REA Group.

  • Macquarie upgraded REA Group from Neutral to Buy after its FY23 results, citing "we recently turned more positive on the cycle and with risk on business levers skewed to the upside."

Stocks Making 52-week Lows

Real Estate is experiencing a sector wide decline on headwinds including:

• Fair value losses incurred on investment properties: A household name like Dexus reported a statutory net loss of $752.7 million in FY23 due to $1.18bn fair valuation losses on investment properties on the back of "capitalisation rates softening across the portfolio, compared to $926.0 million of fair valuation gains recognised in the prior year."

• Global real estate headwinds such as China's Country Garden missing international bond repayments and US new commercial property loans by investor-driven lenders falling 60% in the second quarter from a year earlier.

• Investors are bearish: Bank of America's latest Global Fund Manager Survey says investors are capitulating on their REIT positions at levels not seen since the Global Financial Crisis.

Source: Bank of America