Month: December 2014
Will 2015 be the year for the “3 Ugly Sisters”?
• The ASX 200 rallied ended the week on a positive note, up 128 points, or +2.5% at 5339.• It was pleasant to see a sea of green rather than red, with both the banking and resource sector contributing to its strength today, with National Australia Bank up 93c, or $2.9% at $32.66 and BHP Billiton (BHP) up 94c, or +3.4% at $28.98.• Telstra (TLS) closed 1.2% higher at $5.89 after it had announced that it will begin planning the NBN rollout for next year, worth up to $390M.• Please watch out for the Hickman Report tomorrow.
Generally, switching banks over the years has been a trade that has benefited brokers with commissions more than investors with returns. When we look at the “Big 4” Australian banks over the last decade (chart 1), the main standout was National Bank (NAB) in 2007, selling was wise, as was being significantly overweight Commonwealth Bank (CBA). This trend has continued robustly over the last 12 months. Unfortunately, this is another example that investing too much money purely behind analysts’ opinions is fraught with danger.
•The ASX 200 rallied 48 points higher today at 5211 after trading as high as 5265.
Oil has led equities down, can they bounce with it?
• The ASX 200 finally broke its recent weak spell, ending 10 points higher, or +0.2% at 5162.• The energy sector outperformed the broader market as recently predicted, with Santos (STO) ending up 4.3% at $7.58 and Woodside (WPL) up 3.0% at $35.50. As sent live to Subscribers, we took profit on Hickman’s Long WPL Option calls. • Flight Centre (FLT) fell $1.59, or -4.3% at $35.04 as the $A collapsed through US82c to US81.5c. Investors expect less outbound travel from Australia with a lower $A.• The Telecommunications Sector had plenty of Mergers & Acquisitions (M&A) activity, with Vocus (VOC) in a deal with Amcom (AMM) to buy the remaining 90% it does not own. Telstra (TLS) have also been in talks to potentially acquire Cable operator, Pacnet. VOC ended 0.5% lower at $5.71; AMM +0.4% at $2.36 & TLS up 0.7% at $5.76.
• It was a choppy session for the ASX 200, ending the day with a sea of red, down 33 points at 5152, after trading as high as 5190.• The Banking sector closed slightly mixed, with Westpac (WBC) down 0.8% at $31.57, while NAB closed 0.1% higher at $31.50. Macquarie Group (MQG) disappointed, down $1.17, or -2.1% at $56.41.• As anticipated, the commodities sector dragged the ASX200 the most, with BHP Billiton (BHP) down 3.2% at $27.42 and Fortescue Metals (FMG) down 3.6% at $2.39, we remain long-term bearish BHP.• The Gold sector eased from its recent strength, with Newcrest (NCM) down 2.7% at $10.38 and Regis Resources (RRL) down 3.4% at $1.565.• Myer (MYR) continues to be battered, down 3.3% at $1.305. -19.4% for the month and -46.1% for the current quarter!
Firstly, our thoughts and prayers go to the innocent victims, their families and friends of the recent horrific attack at Martin Place.
Markets generally move from one dominant theme to another and it’s always important to be on top of what’s moving markets at a particular time. I have been amazed that we have recently been bombarded with headlines similar to “oil plunge to hurt world growth”. What they should be saying is “markets are concerned that oil plunge illustrates world economies are slowing” (see chart 4), basically, equity markets are in a negative mood, so for example interest rates lower for longer is getting no headlines. Overall, there this is nothing new, markets move in cycles of positive / negative news interpretation. My economic interpretations of lower oil prices learned from over my +25 years in the markets are:
Are we going to get a Christmas rally and why do they occur?
Really bullish, there's more to go in the reflation rally
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