Market Matters Morning Report Thursday 16th June 2016
Looking for opportunities in 5 stocks that BREXIT fears are hitting Slowly next week's BREXIT vote approaches with even Janet Yellen saying the Fed considered the UK's pending vote when not raising interest rates this morning. However, we believe with the US economic data disappointing over recent times the Fed is now unlikely to be in a position to raise interest rates twice in 2016, compared to the anticipated four increases only last December. In fact, the market is now pricing the next interest rate hike in 2017 – not 2016.
July 16: 10% chance, down from 21% prior to this morning’s announcement.
The strength of the US economy has now replaced interest rate rises as a concern for US equities, however as Fed Chair Janet Yellen suggested, they will be keenly watching the next employment print for signs that last month was an anomaly – and that is likely to dictate Fed policy going forward. Turning to the Aussie market, we cannot dismiss the weak technical’s that have recently played out. Technically a rally back over 5275 is required to improve our confidence that the psychological 5400 area can be broken on the upside. Conversely, US stocks continue to look solid and we would be buyers of the broad market ~2% lower....who said investing was supposed to be easy! Today we are going to investigate some local stocks who have significant earnings from the UK and Europe in an attempt to identify areas to deploy some of the 36% cash weighting in a good risk / reward manner. We remain of the opinion that the UK will vote to remain with the head prevailing over the heart on voting day; hence, stocks that have been oversold on BREXIT fear are prime candidates for some of our cash. The ASX200 Weekly Chart
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