ASX edges up from early lows, US closed tonight (MFG)
WHAT MATTERED TODAY
As we suggested in the AM note today, early weakness was bought into with most strength residing in the material stocks after Copper rallied on Friday night + the diversified miners edged higher overseas. When Materials (+1.64%) & Financials (+0.93%) are the top performers in a session, it’s hard for the market to do anything but rise. US markets are closed tonight for Labor Day however Futures were open during our time zone today, and they were fairly volatile, but overall, down. Asian markets were also in the red today so distilling all of that down, our market did pretty well to edge higher.
What was obvious again today was some buying of the beaten down names, Virgin (VUK), Webjet (WEB) and Western Areas (WSA), all stocks that have been under pressure topped the leader board today showing that money is oscillating towards the underperformers. Other stocks that could be thrown into the basket today was Telstra (TLS) which we added to the income portfolio after a horrible month or so, G8 Education (GEM) & CSR which are worth a look.
By the close, the ASX 200 was up 19pts / +0.33% to 5994. Dow Futures are trading down -34pts / -0.12%
ASX 200 Chart
ASX 200 Chart
CATCHING MY EYE
Magellan (MFG) -0.05%: Out with FUM today for the end of August with the number again topping $100bn comprising net inflows of $566m for the month. We added MFG to the Growth Portfolio today after selling out of Reece (REH) for a profit, the move backing our view that the correction in US tech is one to buy again (for now). MFG is very leveraged to the US tech sector and today we initiated with a 4% position in the growth portfolio, looking for a 10+% rally.
Magellan (MFG) Chart
Webinar: for those that missed it, a recording of the Resource Roundtable is available here
BROKER MOVES
No broker moves today…. A few bits from broker notes below.
· NAB Facing Revenue Drop Next Two Years Amid Transformation: MS
· National Australia Bank is likely to face a fall in revenue from continuing operations, excluding remediation, in both FY20 and FY21, with downside risk next year, Morgan Stanley analysts led by Richard Wiles write in Sept. 6 note.
· ASX Facing Revenue Pressure as Listed Entities Fall Again: JPM
· ASX‘s monthly activity report in August showed weakness in derivatives volumes and a tempering of cash market and capital raising revenue, JPMorgan analysts write in Sept. 4 note.
· Westpac May Raise A$5b if It Proceeds With Asset Sales: Citi
· Westpac may be able to raise more than A$5 billion by offloading non-core assets if it follows peers and exits wealth management and insurance operations, Citi analysts led by Brendan Sproules write in Sept. 4 note.
OUR CALLS
Growth Portfolio: Bought MFG, Added to WSA & LLC, Sold REH & Trimmed OZL
Income Portfolio: Bought TLS & Sold SUL
Major Movers Today
Have a great night
James & the Market Matters Team
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