Trump Bump then Dump…
A confluence of factors combined to send stocks deeply in the red today ahead of the much anticipated APRA ruling on bank capital requirements. What is ‘unquestionably strong’ and how long will the banks be given to achieve it? The banks dropped by 1.5-2% today taking a massive 24pts points off the broader index. ANZ the best (relatively) given they have highest tier 1 while CBA was the weakest link down by -1.86%.
Commonwealth Bank (CBA) Daily Chart
On the broader market today we had an overall range of +/- 83 points, a high of 5761, a low of 5678 and a close of 5687, off -68pts or -1.18%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Trumped Again; DT is struggling to repeal and immediately replace the ‘failure of Obamacare’ as they phrase it, and today had another set- back with a number of key Senators failing to support the revised deal. That in itself is probably not market moving however the implication that Trump will have difficulties getting through the BIG stimulatory measures that have underpinned the strong market advance since his surprise victory has clearly got some traders in sell mode.
The weakness though is very much focussed on Australia so that excuse only holds so much weight. The Banks in the firing line could be it – The ASIC Chair on the front page of FIN this morning talking about Hybrids (we’ll address this tomorrow in the Income Report) could be another, or maybe a soft production report from RIO…or as we wrote yesterday, someone simply ‘selling Australia’ and using the FUTURES market to do it.
Rio Tinto (RIO) Production Numbers; They were weak but that was expected given weather / cyclones – railway maintenance – strikes + generally this is a weaker period of shipments. All up, a weaker score card for RIO. They revised down their full year Iron Ore guidance by 10mpta and this saw Iron Ore prices supported in Asian trade – Futures added +5.19% during our session. The soft numbers should see earnings downgrades, but not big – around the 2% mark.
The stock closed down -1.49% to $64.94 – we own RIO sub $60 – however clearly resistance around $66 short term
Rio Tinto Daily Chart
Oil Search (OSH) Production Numbers; A decent set of numbers today, the clear standout was the prices achieved relative to the prior period – average selling price was $47.84. In a low oil price environment, strong prices become more important than ever – and OSH is clearly delivering on it. Production YTD was 14.8 mboe and full year guidance is unchanged in the range 28.5-30.5 mboe. No doubt the best play in the energy sector however we’re still 50/50 on Oil at this point.
The stock lost -0.74% to close at $6.73
Oil Search Daily Chart
Have a great night
The Market Matters Team
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