The High Court causes a stir (IGO, IFL, MQG)
It was a day of two halves today as the early strength turned into volatility at 2.15PM when the High Court ruled 5 of the 7 Australian MP’s, including Barnaby Joyce, to be ineligible for Parliament causing the Turnbull Government to lose its majority. The uncertainty clearly sent markets into a spin, falling 65pts in around 20 minutes of trading before recovering and settling around where it eventually closed. All in all, we believe this result has a subdued impact on markets as it is expected that the one seat majority will be restored after the New England by-election planned for early December – now just 5-weeks away. In other news, MM stepped up to buy IFL today, MQG has started the year strong and IGO struggled again today after broker downgrades – but more on those later. Overall, telcos outperformed, and financials lagged, the range today was +/- 79 points, a high of 5938, low of 5859 and a close of 5903, down 13pts or -0.22%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Macquarie Bank (MQG) provided a first quarter trading update that was 7% above consensus, lifting guidance by 9% and announcing a $1b buy back – does it get any better! The share price reacted accordingly, jumping nearly 4% to close at $97.91, $3.69 higher than yesterday's close. MQG is a stock we have had on our radar for some time, but were clearly too picky on the price and have missed the boat here. We still like MQG, but maintain vigilant with our entry price, preferring to buy weakness than strength. Hear more about our thoughts on MQG in today’s Direct From the Desk - LINK HERE.
Macquarie Group (MQG) Daily Chart
We own Independence Group (IGO) from $4.27 and after enjoying a ‘quick pop’ up to $4.47 we are now down 5.4% with the stocks trading at $4.04. We covered the initial production report during the week, however since then, a number of brokers have downgraded the stock – the consensus price target now sitting at $3.76. We actually think the production numbers were fine, and the weakness over the last few days presents another opportunity to buy the stock, after coming back and testing technical support . We remain comfortable holders for now.
Independence Group (IGO) Daily Chart
Another broker downgrade help us pick up a stock today, this time in IOOF Holdings (IFL). Both Credit Suisse and Bell Potter reduced their price targets on IFL and the stock fell into our buy zone this morning as it briefly dropped below $10.80. We increased the buy price as the stock rebounded slightly, eventually getting filled at $10.91. IOOF has recently purchased ANZ’s wealth management business for just under $1bn, funding part of the acquisition with an institutional share placement at $10.60 to raise $461m. We like the deal for IFL and see recent weakness as an opportunity.
IOOF Holdings (IFL) Daily Chart
Have a great Weekend all, look out for the weekend report on Sunday
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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