Month: October 2015
Market Matters were invited on the AFR yesterday to comment on rates, see video: click here.
- The ASX 200 continued its descent, losing 28 points (-0.5%) today to 5,239, down 2.1% for the week, however up 4.3% for the month.
- ANZ was the weakest link in the big 4 banks today, shedding 3.4% to $27.21.
- Woolworths (WOW) resumed its red streak, down 2.4% to $24.11 as the S&P downgraded its outlook to negative.
- Next Tuesday we will see not only the race that stops the nation, but whether the RBA will cut its interest rate as most now believe.
Have a good weekend.
Overview Santos (STO) has been in the news regularly during 2015, mostly due to its plunge from around $14 in late 2014 to sub $4 recently in September – a 70% fall! – see chart 1. Clearly, it has been one of the big underperformers in the energy sector with its position being exacerbated as it is weighed down by a debt mountain close to $9bn. One of the clear concerns for STO is the combination of lower energy prices and the increasing cost of debt to energy companies through higher credit /risk margins due to the Crude Oil price collapse – see chart 3. The press is touting 3 potential scenarios for STO from their current position of weakness: 1. Sell off some assets to reduce debt – The obvious problem is here people want to buy the quality assets not the rubbish and because they know STO is a distressed seller the offers are likely to be ‘fair’ at best. Karoon Gas is said to be a bidder for STO’s Victoria assets plus STO has received a formal bid from a Macquarie Group-backed entity for its West Australian Assets.
- A disappointing day, where the ASX200 could not follow the US market’s action overnight, as investors sold off from the morning.
- The ASX200 lost 68 points (-1.28%) to 5,267 led by the consumer staples sector.
- Woolworths (WOW) added to the sector’s pain and announced a profit warning, sending the stock down 9.8% to $24.70. Dick Smith (DSH) extended yesterday’s loss and closed 7.7% lower to $0.775.
- ANZ reported slightly below consensus, and dropped 2% to $28.17, while NAB was the weakest link, down 4% to $30.46.
Best Sector – Utilities
Worst Sector – Consumer Staples
Crude Oil has fallen 10 of the last 12 days and remains down a staggering 60% since mid-2014. – see chart 1. Iron Ore is down 68% since February 2013 in a comparable depreciation to the oil price. – see chart 2.
- A dull day in the ASX200 today, ending 11 points lower (-0.2%) to 5,335, with the talks of a possible rate cut unable to bring the market back into positive territory.
- The Australian CPI data rose less than expected, leaving investors to believe that there will be a rate cut next week on Melbourne Cup day.
- The weakest link today was Dick Smith (DSH), as it announced a profit warning this morning. DSH ended on its all-time low of $0.84.
- National Australia Bank (NAB) resumed trading after it released its not so welcoming earnings number. NAB lost 2.2% to $31.72.
Best Sector – Health Care
Worst Sector – Energy
Flexibility will be required over the next three months!
- As anticipated, consolidation was truly witnessed in the ASX200 today, ending its day only 2 points lower at 5,346.
- Link Administration Holding (LNK) debuted today and investors were pleased with the company ending its day 11% higher to $7.07 from the issue price of $6.37.
- National Australia Bank (NAB) was on trading halt today with speculation of the stock announcing a multi-billion deal to sell its stake in one of its life insurance business.
Best Sector – Health Care
Worst Sector – Energy
Three stocks that may generate Christmas cheer!Good Morning everyone and hoping you had a terrific weekendOverviewThe equities market is currently in the seasonally very strong Christmas period that, with the exception of a likely small dip in mid-November, usually rallies strongly into January.2015 has been a volatile year, especially recently, identifying stocks that will do some ‘heavy lifting’ into Christmas is the key at the moment.Corporate activity will likely spike a few stocks along with investors chasing the year’s underperformers as they have recently with Crown (CWN), Santos (STO), Fortescue (FMG) and IAG Insurance (IAG).We are currently enjoying the best conditions for takeovers since the GFC. 2015 has been a huge year for takeover activity with mergers worldwide up over 35% compared to the equivalent first 6 months of 2014. So, where might their attention move to next?Turning to the Markets1 REA Group (REA) $46.35
- The ASX 200 faded from the get-go. Tired from its recent rally, it managed to close 3 points lower to 5,348, after trading as high as 5,384 this morning.
- The Bank Sector closed with little change, Commonwealth Bank (CBA) up 15c (+0.2%) to $77.50, while regional, Bank of Queensland (BOQ) outperformed, up 1.1% to $13.70.
- The rate cut in China ended with little impact, BHP closed 2c lower at $24.57, while RIO closed only 0.8% higher at $53.81 after trading as high as $54.38.
- The Telco was the weakest link, with Telstra (TLS) down -1.3% to $5.51.
Best Sector – Health Care
Worst Sector – ‘Telco’
Really bullish, there's more to go in the reflation rally
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