6000 remains a cap as stocks hit resistance, IT names well bid (BOQ, BIN)
WHAT MATTERED TODAY
While 60% of stocks closed higher today, the index itself gave back an early rally to close flat on the day after approaching the 6000 level in early trade. It was actually a very negative session given early gains were sold into and the market closed on the low of the day. That said, there were some obvious pockets of strength with the IT stocks offering most support which suits current MM positioning.
Asian markets were a mixed bag today but generally failed to latch onto the positive overseas lead while US Futures were a whisker higher during our time zone.
By the close, the ASX 200 was flat at 5952. Dow Futures are trading up +19pts/+0.08%
ASX 200 Chart
ASX 200 Chart
CATHCING MY EYE
Bank of Queensland (BOQ) -7.24%: announced items to impact the full year results today, taking on provisions of $369m for the second half alone. Of that, $123m was set aside as a result of COVID impacts after the bank set aside just $10m at the first half result earlier in the year. The substantial increase takes into account updated employment forecasts as well as a longer downturn in economic activity and house prices with the provision to account for the expected losses over the life of the current loan book as a result of the changes. The provisions will impact CET1 by 39bps, but is expected to be largely offset by “capital generation,” or earnings such that the CET1 will finish the year “comfortably above the target range of 9.0% - 9.5%.” We prefer the big banks.
Bank of QLD (BOQ) Chart
BIN + NWH:Both stocks rallied today, and BIN looks particularly bullish. NRW Holdings (NWH) were in a trading halt for most of the session only to come back on the boards into the match – the stock added 4% while BIN was up more than 3% on the session. We remain bullish on both.
Bingo Industries (BIN) Chart
BROKER MOVES
· Australian Finance Rated New Buy at Citi; PT A$3
· Boral Raised to Buy at Citi; PT A$5.30
· Charter Hall Retail Cut to Hold at Morningstar
· Boral Cut to Hold at Morningstar
· Paradigm Biopharma Raised to Speculative Buy at Bell Potter
· a2 Milk Cut to Sell at Bell Potter; PT NZ$14.79
· Cleanaway Raised to Outperform at Credit Suisse; PT A$2.45
OUR CALLS
No changes today
Major Movers Today
Have a great night
James / Harry & the Market Matters Team
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