Australian Investment Blog

WHAT MATTERED TODAY

A more bullish morning session than was being indicated by the futures markets played out today with the market putting on a quick +40pts from the early lows – sort of felt like a few fundies hit the buy button to get exposure as the market remains resilient – although the volumes have been really light this week which has amplified the moves. Banks jumped out of the blocks strongly, offsetting some weakness amongst many of the mining stocks – the market seeing its highs early on before trickling lower into the afternoon session.

Stocks in Asia were well supported thanks to what looked like government support coming in for the Chinese Yuan. The big stock rout in China has been influenced by currency weakness, a theme Mr Trump picked up on last night and today the Chinese seemed to be providing some sort of support for it, which caused a decent rally in most Asian markets. The intervention in the Yuan will likely lead to some weakness in the US Dollar – a move we positioned for today by selling out of our long US Dollar ETF.

Overall, the ASX 200 closed up +23pts or 0.37% at 6285 – adding +0.28% for the weeks trade. The DOW Futures are currently down -60pts

ASX 200 Chart

ASX 200 Chart

CATCHING OUR EYE

Weekly Moves – Strong earnings from the likes of Cimic (CIM) helped to propel the industrial stocks to the top of the leader board for the week while the Telco’s also did well. The Healthcare Index was only marginally in the green for the 5 days, however there was some strong buying coming into the sector towards the end of the week. CSL & COH continue to attract cash while Ramsay (RHC) is finding some friends after a fairly torrid few months – the stock now looks bullish here.

Sector moves over the week

Afterpay Touch (APT) has clearly been the talking point for much of the week – the stock adding +30% on better earnings but more importantly, evidence that the US roll out has legs and is on track for bigger / better sales than the market had anticipated. Without throwing cold water on a stock that has clearly been a fantastic play to be in, shorts were high in APT (about 6% of the free float), so this weeks move would have been a combination of natural buying, but also forced buying from shorts that have been hurt on this one. 6% of the free float IS about 12m shares - It traded a total of 6.7m shares today but its 4 week average is around 1.6m shares per day.

Bells have been the most bullish supporter of this stock and this week they slapped a huge $21 price target on it, up from $10.41!! The stock has rallied from a weekly low of $10.36 to an high or $16.19 before closing at $14.38.

Broker calls APT

Stock moves over the week

Broker calls;

• OZ Minerals Upgraded to Buy at Deutsche Bank; PT A$10.25
• Cimic Downgraded to Sell at Morningstar
• Sims Metal Downgraded to Sell at Morningstar
• QBE Insurance Upgraded to Buy at Citi; PT A$11.20
• CC-Amatil Downgraded to Neutral at Citi; PT A$9.50
• Santos Upgraded to Neutral at Citi; PT A$6.04
• South32 Upgraded to Buy at Citi; PT A$4.30
• CSR Downgraded to Sell at Goldman; PT A$3.85
• Navitas Upgraded to Buy at Blue Ocean; PT A$5

OUR CALLS

We sold our US Dollar ETF for a profit small today.

Have a great weekend

James / Harry & the Market Matters Team

Disclosure

Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.

Disclaimer

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