Overseas sentiment dampens markets, Aussie fares better than Asia (REA, RFG)
WHAT MATTERED TODAY
The risk off sentiment from last night flowed through to heavy selling early in today’s session, before some buyers stepped up and supported the broader market. Banks, as expected, were hit hard, along anything exposed to European markets – in particular CYB sold off -2.47%, and JHG off -2.67%. Despite the sea of red on the boards, the local market performed a lot better than Asian counterparts with China & Hong Kong both falling around 1.3% today. Westfield as we know it came to an end today, with WFD ceasing trading following the completion of the Unibail acquisition.
The best performers were the utilities today, followed closely by Health Care, while financials was the worst sector on the index.
Overall, the ASX200 fell 28 points, or -0.48% to 5984 – breaking the key 6000 level, however rebounding ~20 pts from lows.
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Broker Moves; REA group was particularly weak today following three different brokers turning against the “market darling.” The online real estate advertiser has been on an impressive run since the end of 2016 on the back of strong growth prospects in the booming property market. Now the chickens are coming home to roost and analysts are struggling to justify the high PE the stock now trades on – JPM & Macquarie downgraded the stock, while a UBS strategy note highlighted the risks around high PE stocks, in particular REA. The stock was off -3.98% to close at $87.29, at one stage falling to $84.80.
REA Analyst Snapshot
REA Group (REA) Chart
ELSEWHERE….
* REA Group Cut to Underweight at JPMorgan; Price Target A$78
* REA Group Downgraded to Underperform at Macquarie; PT A$86
* APA Group Upgraded to Outperform at Macquarie; PT A$8.67
* Collection House Upgraded to Hold at Canaccord; PT A$1.59
* IOOF Holdings Downgraded to Neutral at JPMorgan; PT A$10
* AMP Downgraded to Neutral at JPMorgan; PT A$4.20
Retail Food Group (RFG) $0.885 / +4.73%; Yesterday’s announcement of the appointment of Richard Hinson to group CEO has been taken well by the market, with the franchise operator following up yesterday’s +9.74% performance with another 4.73% addition today. Richard is an internal hire (of only 4 months), having worked as the company’s franchise business chief since January, coming on after the business issues were identified by the media in December of last year. Has clearly made inroads into the problems of the franchise network, impressing the board and stake holders as he succeeds Andre Nell who lasted less than 2 years in the top job. One to watch, but not one we like at MM given the broken franchisee model and shopping centre exposure.
Retail Food Group
OUR CALLS
No changes to the MM Portfolios today
Have a great night
Harry & the Market Matters Team
Disclosure
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Disclaimer
All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 30/05/2018. 4.30PM
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