Author: james Carter
• The ASX 200 followed its US and European counterparts, ending 45 points lower (-0.8%) at 5833 despite China signalling further stimulus with its economy yesterday.• Of the ‘Big 4 Banks’ ANZ outperformed, up 4c (+0.1%) at $35.68, while National Australia Bank (NAB) closed 39c lower (-1%) to $38.33.• Telstra (TLS) closed well and outperformed the broader market, up 4.5c (+0.7%) to $1.89.
Most people acknowledge that it’s the historically low interest rates, essentially almost free money which has powered the bull market in equities, especially since late 2011. The S&P500 has rallied over 95% since late 2011 as the US Fed cranked up Quantitative easing, the German DAX has rallied over 25% in the last four months as the European Central Bank (ECB) powers up its own enormous Quantitive Easing (QE) / stimulus – see charts 2&3.
• The ASX 200 drifted lower throughout the day, losing 70 points (-1.2%) to 5878, down 1.5% for the week. Today’s broad market selloff was due to investors taking $$$ off the table as the December bank bills indicates an anticipation of only one rate cut this year.• The ‘Big 4’ banks led the way back into the red sea. Commonwealth (CBA) shed $0.93 (-1%) to $91.98 while National Australia Bank (NAB) lost $0.63 (-1.6%) to $38.72.• The Resources sector was also a drag; Fortescue Metals (FMG) lost 4.4% to $1.87 after trading 1.3% higher at $1.98 earlier in the session.• Please watch out for the Hickman report tomorrow.
After Iron Ore, the vast majority of questions I have received recently have been focused around “where is the market?” and “should I be selling around 6000?” After 43 trading days of “treading water” between 5740 and 5997, a decent move from the ASX200 is clearly overdue – see chart 1.
• The ASX 200 closed 39 points higher (+0.7) at 5941 after trading as high as 5948 this morning.• The banking sector gave some of its early gains after the Australian jobs data beat expectations, reducing the probability of two rate cuts, down to one. Commonwealth Bank (CBA) closed 57c higher (+0.7%) to $93.01 and National Australia Bank (NAB) up 28c (+0.7%) to $39.31.• In the Iron Ore sector, Fortescue Metals (FMG) had some positive surprises for their investors and ended the day 10c higher (+5.4%) at $1.955.• The Oil/Energy sector also had a terrific run into positive territory. Santos (STO) closed 3% higher to $7.95 and Oil Search (OSH) up 1.9% to $8.08.• Nine Entertainment (NEC) rallied 3.7% to $2.23 after announcing it has agreed to sell its “Nine Live Events” business for $640m.
See our Market Matters video update – Market Update 14th April 2015, Portfolio update, FMG option position & Webcast
• The ASX 200 continued to slide today, down 38 points (-0.6%) to 5908 and down 1% so far this week.• The banking sector led the broader market into the red sea, with Commonwealth Bank (CBA) shedding $1.36 (-1.5%) to $92.44 and Westpac (WBC) down $0.64 (-1.6%) to $38.92. We remain comfortable that we have reduced our bank exposure in recent weeks.• The Iron Ore sector bounced from yesterday’s underperformance. BHP Billiton closed 1.3% higher at $29.51 and RIO Tinto (RIO) up 1.6% to $55.83.• The major supermarkets continue to slide with Woolworths (WOW) down 0.7% to $29.00 and Wesfarmers down 1% to $43.35. We remain bearish this sector and discussed in previous reports.
Yesterday, more corporate activity hit the news wires sending the prices of both M2 Group and Mesoblast soaring. As I have said previously, one point I am very confident on for Australian equities is Mergers and Acquisitions (M&A) will continue strongly while interest rates are at record lows.
• The ASX 200 lost some ground today, ending 14 lower at 5947.• The banking sector contributed some of today’s negative points, with ANZ down 1.1% at $36.32 and Westpac down 0.5% at $39.56.• As anticipated, the majors in the Iron Ore sector had a weak day. BHP Billiton (BHP) closed 1% lower at $29.12 and Rio Tinto (RIO) down 0.6% at $54.96, while Fortescue Metals (FMG) rallied 3.4% at $1.835 despite being placed on credit watch negative. The potential reduction in more than 700 jobs and change in mine works rosters to trim costs may have contributed to the rally.• The Insurance sector outperformed the Australian benchmark. Challenger (CGF) rallied 1.2% to $7.33, QBE up 1.4% at $13.79 and Suncorp (SUN) up 2% at $13.84.• The major supermarkets disappointed. Woolworths (WOW) closed 1.5% lower at $29.21 and Wesfarmers (WES) down 1% at $43.80.
The housing price “pack of cards” – a concern for our “big 4” banks?
Really bullish, there's more to go in the reflation rally
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