Author: james Carter
• It was a choppy sea of red and a disappointing start for the month of June in the ASX 200 today, having ended 42 points lower (-0.7%) at 5735. The weakness was led both by the banking and resource sector, as global investors look to take risk off from their portfolio with the uncertainty of the ‘Grexit’ closing in on the Eurozone, giving back all that it made last Friday. The Australian Market was clearly trading quite the opposite to our Asian counterpart, China, currently trading 4.0% higher and Hong Kong up 1.1%.• The market was weak across the board until buying came back into the futures around 11.30am, with only the Energy Sector and Property Trusts marginally higher.• The banking sector lost all its good work from Friday, with Australia New Zealand Bank (ANZ) down 47c ( %) to $32.72, Commonwealth Bank (CBA) down 61c (0.72%) to $84.48, National Australia Bank (NAB) down 29c (0.84%) to $34.03 and Westpac (WBC) down 44c (1.31%) to $33.00. While in the resources sector, BHP Billiton (BHP) ended 1.4% lower at $29.19 and Fortescue Metals (FMG) lost 1.7% to $2.38.• Sirtex (SRX) outperformed the broader market, having rallied 14.4% to $30.52 after releasing its positive Sirflox trial results.• The Consumer Staples was one of the worst sectors with Wesfarmers (WES) down 73 points (1.67%) to $42.93 but this was outdone by Treasury Wines down 13c (2.42%) to $5.25.
With the ASX200 sitting within 1% of last Friday’s close, I thought it would be interesting to focus on a few stocks that have bucked the trend and moved over the last 5 trading days. The below winners / losers clearly illustrates two very important points with investing:
• The ASX 200 jumped early from its barrier today, trading as high as 5803, on the last trading day of the month and ending 64 points higher (1.1%) at 5777 for the day, only 13 points lower for the month of May!• The Financial Sector was the strongest, up 1.5%, with Commonwealth Bank (CBA) up $1.59 (1.90%) to $85.09 after a high of $85.82, Australia New Zealand Bank (ANZ) up 47c (1.44%) to $33.19, National Australia Bank (NAB) up 88c (2.63%) to $34.32 and Westpac (WBC) up 44c (1.33%) to $33.56. • The Iron Ore and ‘Telco’ Sector also enjoyed a good day. BHP Billiton (BHP) was up 39c (1.34%) to $29.59 and Rio Tinto (RIO) was up 55c to (0.95%) to $58.20. Meanwhile on the Telco’s Telstra finished up 7c (1.14%) to $6.22, TPG Telecommunications (TPM) up 11c (1.23%) to $9.04 and Vocus (VOC) up 11c to $1.92.• The Market truly felt like window dressing today, the last trading day of May.• Please see the Hickman Report tomorrow.
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• A disappointing day, not managing to follow through on the strength in the US overnight, as the Futures market sold aggressively in the first few hours. The ASX 200 closed 12 points lower (-0.2%) at 5713.• Apart from ANZ outperforming the market, the remaining big 3 banks led Australia’s benchmark lower, with Commonwealth Bank (CBA) being the weakest link, down 63c (-0.8%) lower at $83.50 which dovetails with our view to start accumulating this stock soon.• Poor economic data continues to be released, showing our underperformance against other global economies, particularly the US. The 1Q15 Capital Expenditure was reported far weaker than expected, further confirming Australia’s poor economic health at present.• The gold sector didn’t follow through from overnight’s strength in the physical commodity. Newcrest (NCM) lost 5.4% at $13.90. We currently see better risk/reward elsewhere.
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• After a weak lead from overseas, our market started the day lower and continued to fall from there. The ASX 200 finished the day down 48 points (-0.8%) to 5725, erasing most of yesterday’s gain.• The momentum to the downside increased after the first numbers of the day. The Construction Work done q/q was down -2.4% on a forecast number of -1.5%.• The Consumer Staples sector was the weakest in today’s market. Woolworths (WOW) was down 59c (2.1%) to $27.94, Wesfarmers (WES) down 68c (-1.5%) to $43.40, and Treasury Wine Estates (TWE) down 17c (3.2%) to $5.20. • The resource sector also led the bear charging south. BHP Billiton (BHP) closed 48c lower (-1.6%) at $29.34 and RIO Tinto (RIO) -98c (-1.7%) at $57.31.
With both the US and UK markets closed last night, I thought I would take the different step of looking at a specific chart pattern. I use a number of factors in making investment / trading decisions including fundamentals, statistics and pattern recognition. A lot of people consider only one methodology, but why when they all have foundation?
• With expectation low after holidays in the U S, UK and Germany last night, we again had a pleasant surprise with the market again with risk surely back this week in the Australian Equities Market. The ASX 200 rallied 52 points higher to 5773 with plenty of corporate actions and mergers and acquisitions on the agenda.• With news that we did have, namely on oil up 17c (0.3%) to US$59.89/bbl and Iron Ore up 3.4% in Asia, it was enough to see a virtual across the board rise. • In the resources sector, Fortescue Metals (FMG) rallied as high as $2.50 before ending its session up 23c (+10.6%) at $2.40. The strength of this was mentioned in this morning’s report, despite FMG being not aware of any FIRB applications.• Of the Big 4 banks, Westpac (WBC) was the strongest link, rallying 69c (+2.1%) to $33.65 as investors turn optimistic of its group executive changes.• The utilities sector was the strongest of all today, heavily led by AGL Energy (AGL) – up 99c (+6.4%) at $16.47. This was after AGL announced its strategic roadmap, outlining targets of $1Bn in asset sales by FY17. AGL remains in a neutral pattern and see better risk/reward elsewhere.
Significant Volatility may be just over the horizon
Really bullish, there's more to go in the reflation rally
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