The market fails to hold 6300 (CTX)
WHAT MATTERED TODAY
It was an uninspiring day on the market, with noticeably less turnover than average across the board as the school holiday’s kick in, and while the index finished higher, buyers seemed hard to come by as early strength was slowly sold into. BHP did much of the heavy lifting, adding 2.14% or 7.4 points to the index representing more than half of the move higher. Smaller names had more significant moves, but on no news flow – Pilbra Minerals up 5.88%, Sigma Health and Domino’s Pizza added to last week’s heavy losses falling 4.07% & 3.77%.
Overall, the ASX200 was up 13points, or +0.22% to 6286 – although the market did briefly reach 6300, the end result was a weaker day than expected.
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Broker Moves; Caltex fell 2.7% as Shaw & Partners downgraded to the stock to a hold. The broker made the case that the new Woolworth’s whole-supply agreement is significantly below expectations and earnings expectations need to be lowered to compensate. The hold recommendation was made due to the attractiveness of Caltex relative to the planned IPO of Viva Energy which shows Caltex with much better margins, and any uplift in Viva’s market share to be driven by a larger market. It will be a choppy week for Caltex as brokers re-jig their numbers on Caltex – some brokers had already removed the Woolworth’s contract from future earnings, while some were like Shaw & Partner’s and left disappointed.
Caltex (CTX) Chart
Elesewhere…
· Caltex Australia (CTX AU): Caltex Australia Cut to Hold at Shaw and Partners; PT A$34
· Elders (ELD AU): Elders Upgraded to Hold at Bell Potter; PT A$6.80
· Independence Group (IGO AU): Independence Group Rated New Overweight at JPMorgan; PT A$5.40
· Rhipe (RHP AU): Rhipe Rated New Buy at Bell Potter; PT A$1.25
OUR CALLS
No changes to the MM portfolios today.
Have a great night
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.
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