Australian Investment Blog

Good Afternoon everyone

Market Data


What Mattered Today

Not a bad session if you’re in the Material and Energy stocks today with some reasonable inflation data from China underpinning buying. CPI came in at +2.3% yoy v 2.4% expected, so clearly the market thinks the door remains ajar for further stimulus – although it wasn’t weak enough to instigate growth fears. A good number from a markets perspective although note enough to push the market into the black…

Fortescue (FMG) a standout up +7% ahead of production numbers tomorrow while RIO & BHP joined in. Golds were also strong with Regis Resources (RRL) up +3.4% to $2.43.

Banks were again fairly soggy – NAB the worst (-0.80%), CBA the best (-0.08%), but all in the red. Our index can’t put on any meaningful move higher unless the banks move up and as we highlighted in Friday afternoons note, the list of concerns at present is fairly extensive.

Value was low today – School Holidays the culprit so a lot of insto’s on the sidelines HOWEVER that didn’t prevent BIG moves in Blackmores (BKL) which was off more than 15% following on a negative research report from CSLA.

On the IPO front, WiseTech – which is an interesting tech business providing software for logistics companies started it’s listed life on the right foot rallying +10% higher. Interesting though that stock was scarce before listing BUT it opened up only +2% ($3.41 v $3.35 issue price) before sustained buying took it up to a $3.89 close…$3.52 was the day’s average.



Stocks & Sectors

Energy & Materials the standouts, banks the drag while Crown (CWN) dropped more than 4% as one company exec said they should move on from talk of a James Packer bid…sounds sensible!


Source; Bloomberg


ASX 200 Movers

***What Matters Tonight***

European leads are down with FUTURES on the FTSE -20, DAX -11 & CAC –10. In the U.S, DOW Futures are off -23pts & S&P Futures are off -3pts
U.S Q1 reporting kicks off with Alcoa tonight, then heats up later in the week with a number of the high flying financials, JP Morgan on Wednesday, Bank of American and Wells Fargo on Thursday followed by Citi on Friday

As we’ve flagged recently, expectations are for aggregate EPS to decline 8-9% year-on-year, which puts earnings on track for a fifth quarterly decline in earnings. That said, about 67% of the time earnings actually beat expectations so we’ll need to see a decent beat (over and above the normal beat) for the market to pop higher.

In Q4 2015, 74.6% of stocks beat consensus on earnings and 46% on sales, and given the market rally from recent lows, it’s reasonable to think the market is looking for a number somewhere north of this. Importantly, top line growth numbers will be key given eps is buoyed by buybacks that have been BIG over the past three months.

All up, we remain negative U.S markets at this juncture


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



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