Month: March 2015
• The ASX 200 closed relatively well compared its US and European counterparts overnight, ending the day down 31 points (-0.5%) at 5793 after trading as low as 5748 earlier this morning.• The early rally from today’s low was driven by comments made by a senior RBA official suggesting rates could be cut again.• Both the banking and resources sector contributed to the weakness today. National Australia Bank closed down 0.5% at $37.56 and BHP Billiton (BHP) down 5% at $30.33 (trading ex-dividend).• Today, Subscribers received a live trading alert with the transactions made in the ‘Telco’ sector, please keep an eye out on further alerts for any opportunities that could be seen during the day.
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• The ASX 200 had a choppy session and ended the day slightly higher, up 3 points at 5,824.• The banking sector closed higher, Commonwealth Bank (CBA) settled 0.2% at $90.68 while Westpac (WBC) closed 0.8% higher at $37.67.• The Iron Ore space closed weak and as expected BHP Billiton (BHP) -0.8% at $31.91 outperformed Rio Tinto (RIO) -1.1% at $58.55 and Fortescue Metals (FMG) -5.6% at $2.02.• The energy sector was surprisingly weak today. Santos (STO) closed 2.9% lower at $7.33 after disappointing investors with its drilling report.• To those who registered for today’s Market Matters webcast at 4.30pm AEST, we look forward to speaking with you soon!
Gold was hammered, down $US32/oz. (-2.7%) on Friday, its largest fall in over a year. The US unemployment data released on Friday was extremely positive, increasing the likelihood of an interest rate rise in the US by the middle of 2015 – see chart 3. Higher rates, with no obvious inflation, is very bearish for gold which pays its holders nothing. I have received a number of questions from subscribers in recent weeks about where we should look to buy into gold stocks, but fundamentally I find it impossible to be optimistic gold at present.No market pundits were talking the “Gold Story” when we bought both RRL and NCM in late 2014, but over recent weeks, it has been receiving more airplay which is a classic contrarian sell signal. Importantly, I need a combination of positive fundamental and technical factors to start aggressively buying a stock/sector. The gold sector is one where everything must align for me to start buying as I certainly can find logic in Warren Buffett’s thoughts on the precious metal:
• The ASX 200 closed 78 points lower (-1.3%) at 5821, following the weak US lead and not helped by low volumes today due to Victoria and Tasmania on holiday due to Labour day.• There were very little gems found in the sea of red. QBE Insurance (QBE) outperformed, up 2.8% at $13.81 as investors see QBE benefit from a rise in US interest rates.• The banking sector was weak, Commonwealth Bank, the Alpha of the big four closed 0.6% lower at $90.52. • The commodities space continued to disappoint – gold continued to lose its lustre as Newcrest Mining (NCM) ended 4.7% lower at $12.65 and Regis Resources (RRL) down 12.1% at $1.23. While BHP Billiton (BHP) closed 1.5% lower at $32.15 and RIO Tinto (RIO) down 2.0% at $59.20.
Macquarie illustrates the current strength in the Australian stock market
• The ASX 200 closed only 5 points lower at 5899 today in a choppy session, as investors pause and wait for the US employment data due to be released tonight. • QBE Insurance rallied 2.5% to $13.43 in anticipation for a stronger employment data, meaning a rate hike to be considered in the US hopefully prior to June.• The Iron Ore sector sold off as anticipated, with RIO Tinto (RIO) ending the day 1.2% lower at $60.39 and Fortescue Metals (FMG) down 6.1% at $2.15. As mentioned previously, we are bearish this sector as they are regards price takers rather than price makers.• Regis Resources (RRL) plunged 26.7% to $1.40 after announcing its operating update and disappointing investors with its current production. As mentioned in January, we took profit on RRL and saw better risk reward elsewhere.• Please watch out for the Hickman Report tomorrow.
Three Healthcare stocks that are interesting at current levels
• The ASX 200 clawed back most of its losses, ending 3 points higher at 5904 after trading as much as 32 points lower earlier today.• The banking sector had a breather, closing only slightly lower. Commonwealth Bank (CBA) closed 0.0% lower at $91.12 and Westpac (WBC) down 0.2% at $37.83.• Macquarie (MQG) resumed trading today after a successful capital raising, at pretty much no discount from previous close. We are short term optimistic MQG at present. MQg closed 1.3% higher at $74.50.• Myer (MYR) rallied 4.1% at $1.67 after retail sales were reported in line with consensus. Short covering seems to be the reason for the rally in MYR.• Fortescue Metals (FMG) announced it has extended its debt. We see this news as a breather before the inevitable and remain bearish FMG at present. FMG closed unchanged at $2.29
After “no rate cut” where now for equities?
Really bullish, there's more to go in the reflation rally
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