Australian Investment Blog

What Mattered Today

BHP came out with Q1 production numbers before market open today which were a mixed bag, and enough to prompt some early weakness before buying stepped in around 11am. A strong hour up until midday then a holding pattern for the remainder of the day. On the market today we had a range of +/- 24 points, a high of 5438, a low of 5412 and a close of 5435, up +24pts or +0.45%.

ASX 200 Intra-Day Chart

ASX 200 daily chart

BHP; Production was a tad light on overall, with specific weakness in Copper and Coal while Iron Ore and Petroleum were on the money. They maintained FY17 production guidance but with a caveat around Olympic Dam which was impacted by a power outage. All up the result was ok and early weakness in the share price was met with buying mid-morning. The stock came back to $22 early on before finishing down -0.75% to $22.47.

Those looking for a silver lining in the result could site weather related issues which were the reasons offered by the coy for the misses in Copper and Coal. We’re 50/50 BHP at this stage thinking that a higher $US may provide a headwind for the stock in the near term.

BHP (BHP) Daily Chart

We had a dump of Chinese data at 1pm headlined by GDP which was in line (6.7%), Retail sales were as expected as was fixed asset investment. Nomura put out a comprehensive data set on China today which culminated in a nice chart which tracks the pulse of the Chinese economy. It seems to be doing better than this time last year and momentum in economic indicators seem reasonable. Commodity markets are probably telling us this but good to see in another format as well.

Gold stocks saw some love and we’re now starting to pick through this space again given the gold price has stabilised post the big decline from above $1300 an ounce. Evolution (EVN) put on +3.23%, Newcrest (NCM) added +3.27% and Independence Group (IGO) added +5.70% to close at $4.08. A volatile beast that we currently hold in the MM portfolio.

Gold Daily Chart

Vocus (VOC)….some reasonable strength coming into the stock today and although early signs, it seems the selling pressure is starting to subside. The stock put on +4.58% today to close at $5.94 and is now +13% from the recent low of $5.25. We still think the stock can rally further from here, although note the AGM at the end of November will provide more insight into the actual impact on earnings – if any from the recent debacle. If they confirm previously guided eanings, the stock should rally.

Vocus (VOC) Daily Chart

The casino stocks were still under pressure today – and we remain of the view that Crown (CWN) and Star (SGR) could easily come under further pressure in the short term. Our experience suggests these types of events linger, and create weakness for longer than most expect. That seems to be the right stance at the moment and we remain comfortable with it. Simply all too hard at this point.

The Star (SGR) Daily Chart

Crown (CWN) Daily Chart

Sectors

ASX 200 Movers

Select Economic Data - Stuff that really Matters in Green

What Matters Overseas

Over 100 companies reporting in the US tonight with the main draw cards being Morgan Stanley, Ebay and American Express. Fed member Dudley speaks which will put focus on interest rate expectations in the US – and thus the $US

FUTURES mixed….

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