Month: June 2015
• The ASX200 followed suit with its US counterpart, ending only 2 points higher at 5686.• The banking sector remains well bid towards the final days of the financial year, with the bank index up 2.5% so far this week. Commonwealth Bank (CBA) up +43c (0.5%) to $87.19 after a high of $87.59 whilst Australia New Zealand Bank (ANZ) finished the day the strongest up +21c (0.63%) to $33.64.• The Telco sector performed well with M2 Group (MTU) up +9c (0.81%) to $11.18 and Telstra (TLS) up +6c (0.96%) to $6.34.• Flight Centre took a dive as expected, finishing down $3.30 (-8.8%) to $34.21. (see this morning report).• Despite upgrading its profit guidance and rejecting claims of its accounting process, Slater & Gordon (SGH) lost 5.6% at $6.13. Technically, we are not buyers of SGH in this area.• The Gold sector was not seen above ground today, Newcrest (NCM) ended 3.3% lower at $13.20.
Recently we have seen incredible volatility from a number of world indices and individual stocks, but the Dow remains unchanged after 7 months of sideways action. Firstly, let’s look at a few world indices:
• The rally resumed today in the ASX200, jumping 15 points higher from the barrier at open, reaching as high as 5690 and finishing the day 74 points higher at 5684.• The buying frenzy was mostly global macro driven, with reports of a new proposition by Greece in attempt to dodge a default with its debts to its creditors. Japan is currently trading at its 15-year high, currently up 1.8% on the hopes of the Greece deal to be agreed with.• The banking sector contributed to much of the broader market’s rally, Commonwealth Bank (CBA) closed $1.74 (2.1%) at $86.76 and Westpac (WBC) up $0.58 (+1.8%) at $33.70.• The major iron ore players, BHP Billiton (BHP) and RIO Tinto (RIO) ignored iron ore’s weakness in Asia trade (down 0.6%), both ending 1% higher at $28.61 and $56.34 respectively. Fortescue Metals (FMG) however, lost 0.9% to $2.18.• Another profit downgrade was announced today, Flight Centre (FLT) lost 13.6% to $35.71 – almost $600m was wiped today! • Vocus (VOC) closed 0.5% higher at $5.87 after the Federal court had no objections with finalising the merger with Amcom. We currently hold VOC.
All the press this morning is focused on Greece and whether it will exit the European Union (EU). For me as before, there will be another last minute “band aid” solution and a totally broke Greece will remain financially part of Europe. The sceptic in me says that we all know Greece is broke, but the EU is happier that economists focus on them, rather than the next layer of trouble including Italy, Spain and Portugal. Hence, today I am going to let Europe look after itself and decide whether to pull the trigger on my “technical buy” signal evolving in MYR.
• After a weak lead from overseas over the weekend, The ASX 200 recovered from its lows (29 points) before lunchtime, only to strengthen into the end of the day, finishing the day up 13 points (0.2%) to 5,610. This comes as speculation (or hope) that Greece and its creditors will settle with a last minute deal this week.• The Banking Sector was again the saviour and helped to push our market higher. The strongest performance was by Westpac Bank (WBC) up +32c (1%) to $33.12 and Commonwealth Bank (CBA) up +55c (0.7%) to $85.02.• The Telco’s were also strong with perhaps a hint of safety in mind with TPG Telecom. (TPG) up 33c (3.89%) to $9.07, Vocus (VOC) up 13c (2.28%) to $5.83.• This morning, Seek (SEK) announced a profit downgrade, where investors sold SEK aggressively, trading as low as $14.20 and ending the day down $2.03 (-12.3%) to $14.47. • Financial Services Group, IOOF Holdings (IFL) slumped 13.3% to $9.24 after reports of cases of misconduct by its staff led to investors anticipate broker downgrades in IFL in the next 24-48 hours.• Rubber manufacturer, Ansell (ANN) lost 6.1% to $24.17 after a recent broker downgrade. (ANN) has been in our radar for quite some time, where we now see some decent risk/reward. Subscribers, please see live trading alerts.
Today’s topic covers well over half of the questions that I am regularly asked by subscribers. With little relationship between the two topics, I have decided to treat them separately while focusing on one stock of interest within each sector.
• The ASX 200 surged from the open, rallying as high as 5,612 before ending the day 72 points higher (+1.3%) at 5,599. Up 47 points (+0.9%) for the week.• The banking sector rebounded from yesterday’s gains; Commonwealth Bank (CBA) rallied 1.5% higher at$84.47, up 3.8% for the week.• The Iron Ore sector had a positive bounce; BHP rallied 1.6% higher at $28.41, while South32 (S32) was the sector’s only weak link, losing 3.5% at $1.96.• Please watch out for the Weekend Report tomorrow.
The US Futures Markets are calling the US Central Bank to raise rates relatively rapidly, considering they have basically been at zero since 2008. Markets are factoring on one hike this year minimum and a second one late this year/early 2016. However it’s the three further rate hikes, yes 5 interest rate rises in total before Christmas 2016, that markets are forecasting which is catching my eye:
• It certainly was a gloomy day in both Sydney and the Equity markets, the ASX 200 sold off throughout the session, ending 70 points lower (-1.3%) at 5,522.• Risk was definitely being taken off by investors as uncertainty remains in the Global market with regards to Greece, its creditors and the Eurozone.• The banking sector reversed most of its gains from the previous day. Both Commonwealth Bank (CBA and Westpac Bank (WBC) lost 1.3% at $83.20 and $32.48 respectively.• The Iron Ore sector continued to bleed, Fortescue Metals (FMG) lost 4.1% at $2.13, currently down 13.4% so far this week!• What Matters Tonight?
** Woolworths (WOW) downgrades its earnings guidance this morning. We remain bearish WOW – see recent report.**
Really bullish, there's more to go in the reflation rally
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