Month: April 2015
After Iron Ore, the vast majority of questions I have received recently have been focused around “where is the market?” and “should I be selling around 6000?” After 43 trading days of “treading water” between 5740 and 5997, a decent move from the ASX200 is clearly overdue – see chart 1.
• The ASX 200 closed 39 points higher (+0.7) at 5941 after trading as high as 5948 this morning.• The banking sector gave some of its early gains after the Australian jobs data beat expectations, reducing the probability of two rate cuts, down to one. Commonwealth Bank (CBA) closed 57c higher (+0.7%) to $93.01 and National Australia Bank (NAB) up 28c (+0.7%) to $39.31.• In the Iron Ore sector, Fortescue Metals (FMG) had some positive surprises for their investors and ended the day 10c higher (+5.4%) at $1.955.• The Oil/Energy sector also had a terrific run into positive territory. Santos (STO) closed 3% higher to $7.95 and Oil Search (OSH) up 1.9% to $8.08.• Nine Entertainment (NEC) rallied 3.7% to $2.23 after announcing it has agreed to sell its “Nine Live Events” business for $640m.
See our Market Matters video update – Market Update 14th April 2015, Portfolio update, FMG option position & Webcast
• The ASX 200 continued to slide today, down 38 points (-0.6%) to 5908 and down 1% so far this week.• The banking sector led the broader market into the red sea, with Commonwealth Bank (CBA) shedding $1.36 (-1.5%) to $92.44 and Westpac (WBC) down $0.64 (-1.6%) to $38.92. We remain comfortable that we have reduced our bank exposure in recent weeks.• The Iron Ore sector bounced from yesterday’s underperformance. BHP Billiton closed 1.3% higher at $29.51 and RIO Tinto (RIO) up 1.6% to $55.83.• The major supermarkets continue to slide with Woolworths (WOW) down 0.7% to $29.00 and Wesfarmers down 1% to $43.35. We remain bearish this sector and discussed in previous reports.
Yesterday, more corporate activity hit the news wires sending the prices of both M2 Group and Mesoblast soaring. As I have said previously, one point I am very confident on for Australian equities is Mergers and Acquisitions (M&A) will continue strongly while interest rates are at record lows.
• The ASX 200 lost some ground today, ending 14 lower at 5947.• The banking sector contributed some of today’s negative points, with ANZ down 1.1% at $36.32 and Westpac down 0.5% at $39.56.• As anticipated, the majors in the Iron Ore sector had a weak day. BHP Billiton (BHP) closed 1% lower at $29.12 and Rio Tinto (RIO) down 0.6% at $54.96, while Fortescue Metals (FMG) rallied 3.4% at $1.835 despite being placed on credit watch negative. The potential reduction in more than 700 jobs and change in mine works rosters to trim costs may have contributed to the rally.• The Insurance sector outperformed the Australian benchmark. Challenger (CGF) rallied 1.2% to $7.33, QBE up 1.4% at $13.79 and Suncorp (SUN) up 2% at $13.84.• The major supermarkets disappointed. Woolworths (WOW) closed 1.5% lower at $29.21 and Wesfarmers (WES) down 1% at $43.80.
The housing price “pack of cards” – a concern for our “big 4” banks?
• The ASX 200 closed 8 points lower at 5960 after trading as high as 5996 earlier in the day, unable to break above the 6,000 level again.• The Iron Ore sold off after weaker than expected China Economic Data released this afternoon along with a downgrade in Iron Ore by a major broker sent the sector in the red. RIO Tinto (RIO) closed 2.8% lower at $55.30 and BHP Billiton (BHP) closed 2.44% lower at $29.42. Fortescue Metals (FMG) outperformed the 2 majors, ending the day 2.2% lower at $1.775. This afternoon, subscribers received a trading alert in regards to rolling our Long Call position. **Note the Equity Options market closes at 4.20PM.• Junior Iron Ore player, Atlas Iron (AGO) remains suspended and has announced a suspension in its mining operations. The Domino effect has already begun – Transportation Company, Mcaleese (MCS) went into suspension from trade before market open in relation to its contract with AGO.• Seven Group Holdings (SVW) lost 5.6% to $6.91 as investors remain concerned with its industrial services subsidiary, WesTrac Group – Bad timing as Ryan Stokes was announced as the new CEO of SVW this morning, starting September 2015.• The Oil Sector outperformed Australia’s benchmark. Santos (STO) closed 1.6% higher at $7.64 and Oil Search (OSH) up 1.9% at $7.88. Subscribers also received a trading alert earlier today in regards to taking a profit in our call option trade.• Mergers and Acquisitions (M&A) continue to be the theme so far this year. Today, investors saw this in the telco sector. M2 Communications (MTU) to acquire New Zealand’s third largest internet service provider, Call Plus group for NZ$250m. MTU closed 10.7% higher at $11.55.
As most of you know, while I still see a little further upside in equities, I believe a 10-15% correction is looming for US equities – see chart 1. I am advocating slowly moving away from concentrated “yield chasing” portfolio, to a more diverse and growth orientated stance. This is a clear move away from my usual investment philosophy, which is similar to Mr Buffett’s, but with a potential decent correction looming, I prefer not to be with the crowd.
• The ASX 200 closed 36 points higher (+0.6) at 5968 and +1.2% for the week.• The financials and major supermarkets dominated the ASX200 today, Westpac (WBC) closed 0.9% higher at $39.88 and Woolworths (WOW) closed 1.8% higher at $29.56.• Today, we closed another ‘big 4’ bank position and switch to the REIT sector, locking in a good profit with excellent dividend as Shawn moves away from a high yielding portfolio to a growth portfolio.• Please watch out for the Hickman Report tomorrow.
Really bullish, there's more to go in the reflation rally
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