ASX hits 3 months low, resources drag, tech’s bounce (EHL) **International Alert – Global ETF Portfolio – Buy QQQ US**
WHAT MATTERED TODAY
The majority of stocks closed lower today led by the Material Sector which fell 2% as recent strength was sold into. Concerns around the outlook for global growth as virus numbers spiral higher, especially in Europe the obvious catalyst however we’ve also seen strength in the $US which has provided another headwind. The sector has been strong in recent months and while we think it’s ‘due a rest’ in the short term, we remain positive on the outlook for commodities in the medium term. The IT stocks were the clear winners today, the sector up 2.27% following a strong reversal in the Nasdaq overnight, from a technical perspective, the Nasdaq / tech stocks now look bullish.
The ‘re-opening trade’ took a hit today, Webjet (WEB) the biggest drag in the ASX200 followed by Corporate Travel (CTD), both fell around 6% which highlights the volatility we’re likely to see around these names as outbreaks then containment ebb and flow. We were of the opinion that re-opening in Australia was a catalyst for some of these stocks to improve, however clearly there’s more to play out on the global stage.
Asian markets were mostly lower today while US Futures were higher early, before tapering off into our close. Our market actually did pretty well to close where it did, given our futures were off -57pts this AM + US Futures slide another 0.4% during our time zone. Still, the ASX closed at a 3 month low today, approaching the bottom of its trading range - which sits at 5700.
By the close, the ASX 200 was down -38pts / -0.66% to 5784. Dow Futures are trading down -130pts/-0.47%
ASX 200 Chart
ASX 200 Chart
CATHCING MY EYE
Emeco (EHL) -6.59%: traded below the placement offer price for much of the entitlement offer period, and as a result the company received applications for $6.5m worth of shares from retail holders. This has left the underwriters with an additional ~37m shares than they had hoped, and which look to be getting sold on market. It’s a pretty reasonable looking for a new home in a stock that trades around 3m a day so we suspect pressure will continue for now. We do still like EHL – the shares will wash through and the balance sheet is substantially improved as a result of the raise.
Emeco (EHL) Chart
BROKER MOVES
· Magellan Financial Raised to Add at Morgans Financial Limited
· Panoramic Resources Cut to Underperform at Macquarie
· Newcrest Raised to Neutral at Macquarie; PT A$35
· Australian Pharma Cut to Sell at Bell Potter
· AMP Raised to Buy at Morningstar
· Jumbo Interactive Cut to Neutral at Evans & Partners Pty Ltd
· Laybuy Group Rated New Speculative Buy at Bell Potter
OUR CALLS
Growth Portfolio: We sold Oz Minerals (OZL) & Macquarie (MQG) today, buying Appen (APX) and Megaport (MP1).
***International Alert – Global ETF Portfolio***
Invesco QQQ Trust (QQQ US) Chart
Major Movers Today
Have a great night
James / Harry & the Market Matters Team
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