Australian Investment Blog

WHAT MATTERED TODAY

Unfortunately today can only be described as extremely ugly as we witnessed the potential start of a damaging trade war:

Round 1 – Trump plans to levy $US60bn worth of tariffs against China which resulted in the Dow plunging 724-points overnight.

Round 2 – China counters by slapping tariffs on over 120 US products including pork and wine.

This is poor news on a global level with no clear winners when the 2 superpowers start playing Russian roulette with our short-term economic future. In the scheme of things the olive branch of exemptions that the US offered Australia and the EU around 2pm is irrelevant when China and the US are going head to head – they account for such a meaningful proportion of global economic trade and any disruption / uncertainty that prevails will clearly hurt. Jerome Powell (Fed Chair) mentioned the risks to economic growth that would be created by a trade war earlier in the week when outlining the Feds thoughts around their recent rate hike – suddenly a few hours later markets are talking about potential rate cuts – that’s called market volatility!

The ASX200 was ‘only ‘down ~80-points prior to the China counter but as the news crossed our Bloomberg screens we saw another -40-points in a matter of minutes, following US futures down around 1% and suddenly nobody was talking bargain hunting! The market is still above the lows we saw in February but a close back above 5900 is now required to become vaguely bullish from a technical perspective.

So after the initial sell off the market tried to pull itself out of its rut – but if you blinked you missed it – then China was out and the market slid lower for much of the day. By the close, the ASX 200 had lost -116pts or -1.96% to close at 5820 – which was a better effort than the combined US drop overnight (-2.52%) and the decline in US Futures today (-0.62%) – so we outperformed, but that’s little consolation.
ASX 200 Chart

ASX 200 Chart

WEEKLY PERFORMANCES – ASX 200 & SECTORS

The oil sector was the best on ground for the week + it outperformed today with Woodside (WPL) only down -0.34% compared to BHP -3.13% and RIO -4.35%. With the exception of a little doomsday buying in the gold sector there was little to focus on with a positive bent – the path of most pain would probably be a 1% gap up on Monday but that assumes Trump is quiet tonight, a big ask at present.

WEEKLY PERFORMANCES – ASX 200 & STOCKS

On a stock level there was very little green although our holding in Alumina maintained its bullish rally for the week + again today adding another 0.81%, a good result in such a weak market.

OUR CALLS

We followed through with our planned purchase of Orocobre (ORE) today around $5.80 – the stock closed at $5.83

Orocobre (ORE) Chart

Have a great night

James & 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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