Market starts new year on back foot
The market opened higher this morning buoyed by some tentative buying in overseas markets while it seemed Fridays aggressive selloff was overdone, however despite better than expected manufacturing data over the weekend from China and again today from the Caixin read the market still struggled to hold onto those early gains, and sold off into the close. An early close for the US market tonight and Independence Day tomorrow (no trade) will ensure volumes and most likely conviction remains low, while we’ve also got school holidays for the next two weeks which is great for traffic in from Manly but not really for volumes on the mkt.
On the broader market today, the Energy stocks took their lead from improvement in the Oil price while the Telcos and Financials rounded out the top three sectors. On the flipside, consumer discretionary was hit as were the Healthcare stocks with profit taking in CSL, Ramsay and the like. An overall range today of +/- 46 points, a high of 5729, a low of 5682 and a close of 5684, off -37pts or -0.65%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
The flow of Chinese Data has clearly been improving of late and today was no exception, with the Caixin PMI (Manufacturing Data) printing 50.4 versus 49.9 expected, which is a positive for the resource stocks and we saw them mostly higher today in a weak session – FMG for instance added 0.77% while RIO was up by 0.52% to $63.60 - we hold both in the MM portfolio.
Rio Tinto Daily Chart
Fairfax confirmed that the private equity bidders had walked, unable to make a deal stake up for the complete company – instead they’ll go down the path of spinning off domain and we’d look for information here in the coming days. Domain is a good business and is making ground on REA. FXJ could be an interesting play here sub $1.00.
Fairfax (FXJ) Daily Chart
Elsewhere, it looks likely that VOC will reject the KKR bid and this has the stock tracking backwards. We doubt that KKR would have put their best foot forward in offer 1 however they’ll need to see some competition enter the fray for them to up their offer. What the stock does will likely depend on how the bid is rejected. If they say the bid is highly conditional and materially undervalues the stock, this means no bid is good enough and expect the stock price will fall materially, if they are more constructive in their response, keeping the doors open, then the stock is unlikely to get dumped (too much).
Vocus Communications (VOC) Daily Chart
Have a great night
The Market Matters Team
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