Morning Report Friday 21 August 2015
Last night US equities fell over 2% as the predicated 15% correction appears to be finally underway courtesy of a trifecta of bad news – concerns over world economic growth starting with China, ongoing uncertainty with US interest rates and yet another Greek tragedy unfolding. At Market Matters we have been looking for the this correction for over 6 months and actually thought there was a good possibility of fresh 2015 highs prior to any decline but last night’s breakdown feels significant with a further 10% decline likely. The S&P500 is amazingly in its tightest trading range since 1927 so a 10% move as it breaks out of this range is very realistic – see chart 1. Today’s report title mentions “profit taking” for a specific reason because last night heavy declines in the “Fab Five” led equities lower, the strong performers of 2015 got hit hard as investors actually did lock in some profits. Growth stocks were sold, erasing $44bn from the value of these market favourites – Amazon, Apple, Facebook, Google and Netflix. Usually journalists are being very optimistic when they write “profit taking led the stock market lower” but for once its accurate. Identifying our equivalent stocks to the US’s “Fab Five” is far harder but some stocks that catch our eye which have been strong this year to-date, while the ASX200 is down over 2%, are:
Show more...
