Retailers run scared of Amazon…
A yawn of a session really to start the week with Healthcare the only sector in the Green....while the Telco’s and the real estate companies were the biggest drag…5800 continues to be very elusive after we closed just a few basis points below it on Friday. Technically, that level needs to be broken on a close basis before a strong move up towards 5900/6000 should play out while on the flipside a break of 5675 would turn us more negative. In our Weekend Report out on Sunday, we suggested that statistically while 5675 holds for the ASX200 Australian stocks should be strong over the next 2-6 weeks but there are two things that may hinder this outlook, at least until April:
- Seasonally March is usually a month where things drift, plus our banks have already satisfied their statistical upside projections for March
- US banks look set for a reasonable pull back which is likely to cap our banks at least for a few weeks, a theme we’ve seen start to play out today
Given the composition of the index, the market will find it very hard to rally if banks are under pressure.
ASX200 Annual Seasonality Chart
On the market today, we were lower to open and continued to drift trading in a range of +/- 32 points, a high of 5796, a low of 5764 and a close of 5778, down -20pts or -0.36%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Amazon is coming and will hurt Harvey Norman, Myer, JB Hi- Fi and Super Retail Group the most according to a note out today by Credit Suisse, and the aggression Gerry Harvey has shown in recent times through the media gives more kudos to that claim it would seem. They reckon that when Amazon launches its online shopping service in Australia sometime this year that retailers of electrical and home items, sporting goods, clothing and toys will be hardest hit given these products seem to move the most through the Amazon channels….
Harvey Norman didn’t help the cause today with a Director selling 311,200 shares (transacted on the 15th March) which caused a drop of more than 8% today. We’re fairly high conviction investors at Market Matters and the retail sector at this stage is simply too hard….and interest rates are yet to move higher nor have we seen any mortgage stress as yet! We have no interest in this sector currently
Harvey Norman (HVN) Daily Chart
Another stock doing it tough today was Fletcher Building after downgrading earnings….just a month after they reported 1H17 numbers which is rather concerning. One problematic project seems to account for the bulk of the $110m downgrade however they’ve used the opportunity to throw in a few other bits and pieces re-basing earnings expectations…The stock finished almost 10% lower…No interest
Fletcher Building (FBU) Daily Chart
Have a great night,
The Market Matters Team
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