Market Matters Afternoon Report Wednesday 20th April 2016

Afternoon Report 20/04/2016

Market Matters Afternoon Report Wednesday 20th April 2016

Good Afternoon everyone

Market Data

What Mattered Today

Another positive session on the ASX today with the miners leading the charge once again….RIO up +4.08% to $51.30 and BHP up +3.41% to $20.34…BHP out with production numbers today and we’ll cover more on that below.

Banks lagged – as did other defensive names such as Sydney Airports (SYD) which was flat v a reasonably strong day elsewhere. Westpac (WBC) the best of the banks adding +0.69%, ANZ the worst dropping -0.67%. Interesting to think about the likes of Sydney Airports (SYD) which have had a cracking 2015…early 2016 – up from +$5.00 to $6.60 HOWEVER it does look like its losing steam. Obviously a quality company but expensive plus global interest rates going higher will become a headwind. A stock we’ve liked but would be trimming at least – or selling completely

Aussie Aussie Aussie…..the dollar climbed to 77.85c today on the back of commodity price strength….As mentioned in the morning note, commodities are nearing our sell zone just at the time their coming onto the radar of others….We sold Oil Search (OSH) today at $6.85 after buying a few days around $6.22; A 10% gain in this market which we think is worth booking.

Telstra (TLS) is another stock we have in our portfolio….bought pre-divi around $5.15 and now trades at $5.42. It’s important to manage open trades and we bought TLS for the divi plus we targeted $5.50 as a sell zone – so we’ve got to stick to the plan. We just need to be mindful of picking up the franking credits from the dividend (45 day hold period).

As alluded to above, BHP out with production numbers today which were OK….a little weak but that was expected and importantly, supportive of Iron Ore prices. RIO was out yesterday, which we’ll cover here (given it was a v’small afternoon missive yesterday…busy day!!). In short, RIO better than BHP although both has slight downgrades to full year guidance which is supportive of Iron Ore prices. Less ore hitting the mkt is a good thing for prices…

BHP production…March Quarter…. OK numbers….they beat expectations for copper, met coal and petroleum. and missed on iron ore – weather related so not a broad surprise – and thermal coal (small miss). Iron Ore guidance the key and was revised down marginally. January. Although worth noting that iron roe price is benefiting, currently tracking ~30-40% ahead of consensus expectations. Hence iron ore price upgrades more than offset iron ore production volume foregone.

RIO Production…March Quarter….From Tuesday….Good numbers…better than BHP in aggregate for FY 16 although downgrades coming through for FY17..Iron Ore the main game for RIO with the March quarter always seasonally softer. RIO normally ship ~22-23% of FY sales in MQ, and this year was no different. The core WA operations produced at a 321mtpa run rate and shipped at 309mt rate… on track for guidance of 330-335mt

Stocks & Sectors Today

Source; Bloomberg

ASX 200 Movers

***What Matters Tonight***

European leads are weak with the FUTURES on the FTSE -14.50, DAX -8 & CAC –9
DOW FUTURES are off -32pts….

Regards,
The Market Matters Team
Level 12 28-34 O'Connell St
Sydney, NSW 2000

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 20/04/2016. 4:14PM.
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