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Month: January 2016

Afternoon Report Thursday 7 January 2016

by james Carter

  • The ASX 200 continued to be decimated by selling, after China again cut the reference rate on the yuan by the largest amount since August. The Chinese market fell 7.3% with the first half hour of its opening and the regulators stopped trading in that market for the day (second time this week). The ASX 200 closed the day down 113 points (-2.2%) at 5,010, after touching a low of 4,996.
  • The worst sector today was Energy with Woodside Petroleum (WPL) down $1.45 (-5.1%) to $26.94. Whitehaven Coal (WHC) was down 7c (-10%) to 60c, while Santos (STO) closed down 26c (-7.4%) at $3.25.
  • The Banks weren’t able to support the broader market, with NAB being the weakest link of the ‘big 4’, down 3.3% to $28.02.
  • Domestically, new home building approvals slumped by 12.7% in November, 4x more than the consensus.

Best Sector – IT
Worst Sector – Energy

Morning Report Thursday 7 January 2016

by james Carter

Some interesting opportunities on the horizon as panic kicks off 2016

Afternoon Report Wednesday 6 January 2016

by james Carter

  • The ASX 200 was not able to follow on from the positive close in the US markets, with selling pressure experienced from the start of session, and continued to follow on throughout the day.
  • The ASX 200 closed 61 points lower (-1.2%) at 5,123, after hitting a low of 5,094.
  • China continues to be a concern, economically, while tensions and concerns mounted after reports of North Korea tested a large nuclear bomb.
  • The resources were one of the hardest hit, with the Material Sector down 2.5%. BHP Billiton (BHP) $0.43 lower (-2.5%) at $17.15, whilst RIO Tinto ended $1.33 lower (-3%) to $42.75. Fortescue Metals (FMG) was savaged , down $0.115 (6.1%) to $1.78.

Best Sector – Utilities
Worst Sector – IT

Morning Report Wednesday 6 January 2016

by james Carter

OverviewAfter China sent the world’s equity markets into sell-mode to welcome in 2016, locally we received the additional ‘whammy’ that Dick Smith (DSH) has, basically, gone broke.Firstly, on China, volatility is nothing new and Monday’s fall is only a blip when we stand back and look at price action over recent years – see chart 1.The Chinese market is not a “free” market, for example margin loans collateral is not marked-to-market. e.g. in our market this equates to investors being long Dick Smith using Slater and Gordon as collateral! Nevertheless, whenever China has significant market falls, and there have been a few, the authorities intervene / implement fresh measures to stop the selling and calm the market.This yoyo-style ‘swings and roundabouts’ may well continue until all unnatural market influences are removed and the market becomes free to an equivalent level of other major indices.There is no surprise that volatility in China has a significant impact on the Emerging Markets. Continued volatility may coincide with the emergence of the buying opportunities in Emerging and correlated stocks that we have been discussing recently -see chart 2.Moving onto Dick Smith and the news it has entered into voluntary liquidation, fingers of blame are already being pointed; what are auditors, Deloitte’s, paid to do? Gerry Harvey summed up the issues facing Dick Smith simply and perfectly with these comments:”We’ve had to close a few stores that became unprofitable over the years but when 70-80% of your stores are in that position the business is broken” – A summary of Gerry Harvey’s comments on Dick Smith.This a classic example of the benefits to investors of using a combination of both fundamental and technical analysis which Market Matters has always advocated.

Afternoon Report Tuesday 5 January 2016

by james Carter

  • The market fell on the opening after the rout that was seen overnight, then all eyes were turned to see the opening in Shanghai, which turned out to be rather muted after falling 3% then recovering. The ASX 200 fell 68 points by 10.30AM, but was unable to get any support for a push higher. From 3pm it fell heavily to close down 86 points (-1.6%) to 5,184.
  • As possibly expected, Dick Smith (DSH) announced to the market before the opening that it was entering into Voluntary Administration. (Woolies (WOW) were right after all!).
  • There was red on the screen across most sectors. The banks were heavily sold down with Australia New Zealand Bank (ANZ) down 46c (-1.7%) to $27.07. Commonwealth Bank (CBA) fell $1.35 (-1.6%) to $83.11, National Australia Bank (NAB) fell 44c (-1.5%) to $29.41. Westpac Bank (WBC) was slightly better, dropping 31c (-0.9%) to $32.69.
  • Resources were relatively quiet with BHP Billiton (BHP) down 22c to $17.58 and RIO Tinto (RIO) down 55c to $44.08. Fortescue Metals (FMG) out shone them all with a 2.5c rise to $1.895.

Best Sector – Consumer Discretionary
Worst Sector – Energy

Morning Report Tuesday 5 January 2016

by james Carter

News Alert *DJ Dick Smith Holdings (DSH) Enters Administration.

Afternoon Report Monday 4 January 2016

by james Carter

  • The Australian market started the New Year off to a solid start early on, rallying as high as 5,331, but faded prior to the Chinese PMI figures and went fell further after they were released worse than expected. The ASX 200 finished the day down 25 points (-0.5%) to 5,270.
  • The Chinese PMI figures released at 12:45pm were expected to be around 48.9, but came in at just 48.2 (further contraction). This sent the A$ down and the resources and banks all proceeded to fall.
  • BHP Billiton (BHP) was trading on its high for the day ($18.19), just prior to the release of the data, but closed the day down just 6c to $17.80
  • This year will continue to have some landmines detonated and some diamonds found in the rough.
  • The Energy sector had a good start for the year, particularly with Woodside Petroleum (WPL) following its physical commodity rally, as well as its announcement of intersecting a gas column with its joint venture in Myanmar. WPL closed 3% higher at $29.58, while Santos (STO) closed 4.1% higher at $3.83.
  • Investors now wait for a debt announcement in Dick Smith Holdings (DSH) after going into trading halt this morning. The last trade for DSH was at $0.355

Best Sector – Energy
Worst Sector – Financials

Morning Report Monday 4 January 2016

by james Carter

Market Matters view over recent months has been that 2016 will be a tough year for equities with the US S&P500 likely to fall at least 15%, ideally after making one final all time high – see chart 1.

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