Australian Investment Blog

Good Afternoon everyone

Market Data

What Mattered Today

The first down day in the last 9 for the ASX today with some profit taking in the resource space following a pretty strong run up in prices of late. Energy coys were actually stronger today led by Oil Search (OSH) +1.38%, Woodside (WPL) +1.30% and Origin (ORG) +0.69% to close at $5.87. RIO released its production numbers this morning with the stock up early but finished the day down -2.29% to $48.99. More on the numbers below.

A range of +/-34pts. 5432 low, 5466 high and a close at 5451; down -7pts or -0.13%.

We’ve obviously covered our views fairly comprehensively in the morning reports, suggesting that funds are starting to find their way down the food chain, into stocks that have been under pressure for some time. It’s the perception of value in an expensive market and is often a characteristic of the final stages of a bull market. As we wrote in this morning’s report, Right now it’s a time to dance with stocks, not marry them. When the music stops, be prepared to cut and run - however we still think the most interesting part of the night is still to come!

In a broader sense, the market has continued to move higher since the February low with the ASX breaking out of its 11-month trading range while the US market makes new all-time highs. It's becoming harder to find value in a strong market, with the S&P 500 on 19.4 times current earnings while the ASX 100 sits well above historical averages.

ASX 100 PE

Source; Shaw and Partners

If we use 'collective wisdom' which relies on consensus price targets + consensus dividend yields, we can get some ideas for further analysis....Lend Lease (LLC) looks cheap on this metric. It closed today at $12.46


Source; Shaw and Partners

RIO’s Q2 production numbers were OK, but the headline figure in Iron Ore and Copper were a tad light on. They did maintain full year guidance of around 330mt for Iron Ore which is the main thing, which implies they’ll need to produce 85.5mt for each of Q3 and Q4 v 85.3 produced in Q2 (which was below consensus of 88mt) – so, the run rate looks achievable.

RIO looks a bit hot right now and should pullback in our view. Iron Ore -4% in Asian trade today helped put some pressure on the stock.



Sectors Today

Source; Bloomberg


ASX 200 Movers

Select Economic Data; Stuff that really Matters in Green

We saw the RBA minutes today from their last board meeting. Nothing changed really – still waiting on more data around inflation, housing and employment which will filter into economic forecasts. Inflation out next week which will be key for the August decision. Right now, about a 60% chance of a 25bp cut.

All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 19/07/2016. 5:00PM.

Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The Market Matters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.

The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself or if you require a personal recommendation, you can seek the assistance of a financial adviser. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.

The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.

If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.


To unsubscribe. Click Here