Are Banks a Buy or Sell
What Mattered Today
The market cracked lower today, opened down then saw sustained selling, mainly targeted towards the banks. Of the 45 index points lost from the ASX 200, the BIG 4 accounted for 21.7 of them or 48% of the drop. Nickel stocks were also hit hard with Western Areas (WSA) off 19.21% and Independence Group (IGO) down -10.15% following new regulations in Indonesia that opens the door for resumption of ore exports. Back in 2014, they imposed a ban on unprocessed ore exports which was put in place to try and improve the ‘value add’ industries, which is sensible, but weak Government revenues seem to have forced their hand and they’ve introduced some loop holes that miners can now take advantage of to start exporting. Obviously a negative for our Nickel miners and they really took it on the chin during trade today - on big volume. We’ve traded Independence Group in the past however would now give it a wide birth.
On the market today, we had a range of +/- 60 points, a high of 5770, a low of 5710 and a close of 5721, off -45pts or -0.79%.
ASX 200 Intra-Day Chart
ASX 200 Daily chart
Banks; It was a bloodbath in the banks this time last year with both January and February 2016 seeing declines for the sector of almost 20% in aggregate. The list of negatives was as long as your arm: capital needed; zero growth; no loan growth; cash rates going sub 1%; margin pressure; bad debts; recession; house price collapse. Banks got get very cheap relative to historical averages on the expectation that earnings would collapse. They didn’t and we saw a strong rally in the sector from the lows…
We’re now starting to see banks pullback, and the obvious question is; should we buy this pullback or sell it?
ANZ Daily Chart
NAB Daily Chart
Westpac (WBC) Daily Chart
Sectors
ASX 200 Movers
What Matters Overseas
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