Author: james Carter
Signs are occurring of a US equities – oil disconnect
- The ASX 200 finished a very quiet day of trading, marginally higher at 4,880.9 finishing the month down 2.5% and down 7.8% for the year so far… is this Déjà vu’ from 2008?
Good morning everyone and we hope you all had a great weekend. Overview The position of the market was reviewed in the weekend report so this morning we take a look at Woolworths (WOW) and Wesfarmers (WES). Market Matters are a market leading advisory service, to subscribe to their free newsletter click here On Friday, after posting an almost $1bn after-tax loss for the half year, Woolworths (WOW) shares crashed over 6%, to fresh multi-year lows in early trade only to rally strongly and close up 1% for the day. This very strong turnaround on bad news is a classic scenario for a major bottom in a bear market; do Market Matters think WOW is now a buy? Market Matters are a market leading advisory service, to subscribe to their free newsletter click here Two things are clear1. WOW has experienced a bear market correction since 2014 with the stock falling almost 30% but trading conditions have deteriorated and their investment in Masters has been a disaster.
- The ASX 200 finished a very lack lustre day : 1 point lower to 4,879. For the week, the index finished down 73 points (-1.5%)
- The major news was the loss reported by Woolworths (WOW). Posting a loss of $973m, their first loss for 23 years, after a first half write down of Masters by $1.9b. The stock plummeted to a new low of $20.50 (-6.4%), before climbing back to finish the day up 45c (+2.1%) to $22.34, as the short sellers scrambled to buy back. Further, WOW announced their decision on a new CEO after scouring the world unsuccessfully. They promoted the only internal candidate, Mr Brad Banducci to the top job.
- Following on from the very bad news of Dick Smith (DSH) stores, Harvey Norman (HVN) reported a 30.7% rise in after tax profits of $185.5m for the six months to December 31st 2015. The stock finished down 8c (-1.7%) to $4.53.
- One of the worst performing sectors for the day was resources. RIO Tinto (RIO) was badly hit overnight in London (-3.6%) and this morning it was announced that Moody’s had downgraded RIO’s credit rating to Baa1 (Outlook Negative). The stock fell badly to a low of $39.74 and finished the day down just off this level at $40.00 (-3.2%). This in turn put the dampeners on BHP Billiton (BHP) which finished down 41c (-2.6%) to $15.59 after a low of $15.38.
* Watch out for the weekend report tomorrow.
Three stocks we’re watching carefully at the end of a tough week
- A frustrating day was witnessed, with the ASX 200 selling off from the morning and trade sideways until the last hour and a half of the session, where the ASX 200 managed to rally back in positive territory and close 6 points higher to 4,881.
- BHP had a good day, despite ending its day down $0.18 (-1.1%) to $16.00, it outperformed from its close in the US.
- Adelaide Brighton (ABC) ended marginally lower, down 0.6% to $4.79 even though it reported a ~20% increase in profit. Concerns on the current property market remain to be the issue.
- Surfstich (SRF) sold off, down 34% to $1.14 after reporting a net profit of $368k, the company’s full year profit forecast is looking negative.
- On better news, Seek (SEK) reported a 1H profit of ~$275m and reaffirmed its full year guidance, helping the company rally 7.9% to $14.38.
Best Sector –Industrials
Worst Sector – Consumer Staples
- A frustrating day was witnessed, with the ASX 200 selling off from the morning and trade sideways until the last hour and a half of the session, where the ASX 200 managed to rally back in positive territory and close 6 points higher to 4,881.
- BHP had a good day, despite ending its day down $0.18 (-1.1%) to $16.00, it outperformed from its close in the US.
- Adelaide Brighton (ABC) ended marginally lower, down 0.6% to $4.79 even though it reported a ~20% increase in profit. Concerns on the current property market remain to be the issue.
- Surfstich (SRF) sold off, down 34% to $1.14 after reporting a net profit of $368k, the company’s full year profit forecast is looking negative.
- On better news, Seek (SEK) reported a 1H profit of ~$275m and reaffirmed its full year guidance, helping the company rally 7.9% to $14.38.
Best Sector –Industrials
Worst Sector – Consumer Staples
BHP plunges & investors attention focuses on property
- The Sea of Red returned to the ASX 200 today, with the broader market ending its day on its lows, down 104 (-2.1%) to 4,875.
- The big 4 banks did plenty of damage, after an article on mortgage and property worries built concerns on future bad and doubtful debts with current mortgage holders. Westpac (WBC) was hurt the most, ending its session down 3.9% to $28.49.
- The Resource sector gave back yesterday’s gains and more. BHP lost 8.2% to $16.18, while RIO closed 5.8% lower at $42.02.
Best Sector –Industrials
Worst Sector – Materials
3 very important charts / markets catching our eye today
Really bullish, there's more to go in the reflation rally
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