Despite a broadly positive reporting season, the ASX200 fell heavily on Monday after Fed Chair Jerome Powell’s comments at the Jackson Hole Economic Symposium put to rest any hopes of a ‘pivot’ in the speed and size of rate hikes in the US over the coming months. In order to ensure he was not misconstrued, Powell made it clear that hikes would continue in order to bring down inflation, which would result in slowing economic growth and ‘pain’ for households and businesses.

The result was a 3.4% fall in the S&P500 and 3.9% fall in the Nasdaq on Friday, and further falls throughout the week, as investors process the likelihood that the stunning rally since June’s lows may have been premature.

S&P500 year to date

The ASX has followed a similar trajectory, albeit with more modest falls overall, and is now well below 7000 points, having given back all of August’s gains and then some. Fewer investors are actively trading; most are sitting on the sidelines as their favourite stocks drift lower. Cash levels remain high, indicating many are hoping for a more significant sell-off before they load up their portfolios.

Fortescue Metals Group (FMG) remains the most traded stock by value, with high-value traders appreciating the volatility. BHP (BHP) shares went ex-dividend on Thursday, which combined with negative leads from Wall Street saw the stock down more than 7.5%. Investors who’ve been hoping to top up their holdings jumped on the opportunity, with huge buying. The company has been a strong buy cum dividend also, as income hungry investors enjoy the extra income. Rio Tinto (RIO) has also seen buying but in far more modest volumes.

Exchange traded funds (ETFs) continue to soar in popularity, and while Vanguard’s ASX200 option (VAS) remains the most consistently popular instrument, GEAR and BBOZ have been traded in meaningful sizes this week. BBOZ is Betashares Australian Equity Strong Bear Hedge Fund, offering downside protection by allowing investors to profit from a falling market. (Similarly, investors suffer losses when the market rises.)

BBOZ has been a popular buy during volatile periods and is most traded by high net worth and sophisticated investors. GEAR is Betashares Geared Australian Equity Hedge Fund, offering leveraged exposure to the ASX200; interestingly trading in GEAR is quite mixed. Investors were also buying GOLD, ETF Securities Physical Gold ETF, both often considered a safe haven in periods of high volatility.

Betashares Australian Equity Strong Bear Hedge Fund (BBOZ) over 12 months

One interesting exception from the most traded stocks is the banking sector; National Australia Bank (NAB) has been sold above $30, but investors are becoming increasingly comfortable with this threshold as it has been tested above this level several times since February and continues to hold ground. Commonwealth Bank (CBA) has barely made the top 10 most traded stocks, and Westpac (WBC) has seen some selling, but low volumes. ANZ (ANZ) has largely been ignored by investors. Overall volumes in banks are way down, indicating that investors feel the sector is neither overbought nor oversold, and are happy to hold at these prices.

On international markets, Boeing (BA.US) has seen high-value buying. Despite a recent bounce, the stock is down more than 30% over five years, having never regained its pre-Covid highs, or those of early 2021.

Boeing (BA.US) shares over 12 months