Author: james Carter
• The ASX 200 reversed all of yesterday’s losses, ending up 38 points (+0.7%) at 5899, down only 0.4% lower for the week.• The April Rate cut hype continues to be the agenda, with the Australian Dollar down 0.2% at US75.9c, while the banking sector surged. Commonwealth Bank closed 1.2% higher at $94.40 and Bank of Queensland (BOQ) up 0.9% at $13.75.• The ‘Telco’ sector had a good run today, with iiNet (IIN) outperforming the sector ending 2.5% higher at $8.93, just shy of its all-time highs of $8.95.• Mergers and Acquisitions continue in the global equity markets, domestically, Bradken (BKN) rejected a takeover bid by a consortium of Koch Industries and Pacific Equity Partners for the amount of $2.50 a share. BKN rallied 18% at $2.29.• Iron Ore sold off another 3.5% in Asian trade today, Fortescue Metal (FMG) closed 4% lower at $1.82. Note, we had a stop loss at $1.90 for the physical stock, however, as FMG was purchase via options, we are giving more room/buffer with the current price action.• Please watch out for the Hickman Report next Monday. Have a great Easter Break.
• The ASX 200 started the month in a dull and choppy session, ending the day 30 points lower at 5860.• The driver of today’s weakness was none other than the resources sector, following overnight’s movements and Iron Ore down 2% in Asian trade. BHP Billiton (BHP) down 2.2% at $30.34, Santos (STO) down 2.9% at $6.93 and Newcrest Mining (NCM) down 1.7% at $13.14.• Macquarie Group performed well out of the financials, up 1.2% at $77.60• Vocus (VOC) outperformed the ‘telcos’ space, closing 4.1% higher at $6.11 versus Telstra (TLS) up 0.3% at $6.33 and iiNet (IIN) down 1.4% at $8.71.• This afternoon, ‘Abenomics’ architect says BOJ must ease again on April 30 – Reuters, meaning more $$$ flooding into the Japanese market to stimulate the economy.
• Last night, the US equity markets lost most of its gains from the previous day. The DOW closed 200 points (-1.1%) lower at 17,776 and the S&P 500 down 18 points (-0.9%) at 2,068.• Fear and uncertainty is slowly creeping higher, with the volatility index up 5.4%. See Fear and Greed Chart.• In the commodities markets, Crude Oil and Iron Ore continues to tumble. Oil closed -2.2% lower at US$47.60/bbl and Iron Ore down -2.5% at US$51.35/t. BHP Billiton (BHP) is expected to open 50c lower, around $30.53 this morning after its performance in the US.• The ASX200 is expected to open 25 points lower this morning, around the 5,865 level. As it is the first day of the month, there will be no surprise if we witness a positve market sentiment by the afternoon, as it is the start of the month and quarter.
It’s very easy to get caught up in a journalist’s headline; after all they have to sell newspapers. Yesterday, the Financial Review’s leading story was classic scaremongering, aimed right at the largest nerve of Australian share market investors. The Federal Government’s tax discussion paper released this week raised the idea of abandoning/restructuring dividend imputation as they attempt to balance the books as the mining boom fades into a distant memory. It would be unpleasantly ironic if just as investors pile into high yielding shares, due historically low interest rates, the Government were to change the rules.
• The ASX 200 reversed some of its losses from the previous day, up as much as 85 points, only to drift away and close 45 points higher at 5892.• The banking sector had a positive close, with regional, Bank of Queensland (BOQ) outperforming the ‘big 4’, ending 2.5% higher at $13.79.• The Iron Ore sector had a good rally; BHP Billiton (BHP) closed 3.1% higher at $31.03 and Fortesecue Metals (FMG) up 1.8% at $1.96, although they currently remain in a down trend.• There is now a ~70% chance of a rate cut when the RBA meets on Tuesday, 7 April.
After yesterday’s long report, I thought today would be a short concise report for this short Easter week. There was one point that I want to reiterate and put firmly in perspective, the current position of the Australian stock market:
• The ASX 200 sold off from the start of session this morning, down as low as 5828, only to recover some and close 73 points lower at 5846.• Following the Government’s release of its ‘tax discussion paper’, the sectors hit the most were stocks who offer imputation tax credits, predominately the ‘big 4’ banks. Both Commonwealth Bank (CBA) and National Australia Bank (NAB) closed 1.3% lower at $93.10 and $38.32 respectively as uncertainty and fear has risen to investors’ eyes. See the recent Hickman reports noting our view to transition Shawn’s portfolio away from High yield to predominantly growth stocks.• The Oil stocks sold off as expected, Santos closed 6.8% lower at $7.02 and Woodside Petroleum (WPL) down 3% at $34.00. Caltex (CTX) closed just shy of its recent placement price of $34.50, at $34.44.• Telstra (TLS) shed 1.4% off today at $6.29 as it is regarded in the same basket of the stocks that would be affected with a change in tax. • Panaust (PNA) rallied 40% to $1.715 after Gram revisits PNA and bids at $1.71 a share, versus its previous bids received at $2.20 and $2.30 a share.• Today, we reduced a percentage of a couple of high yielding stocks into a growth stock as proposed in the Hickman Report yesterday.
I apologise that yesterday’s alert confused a number of subscribers. I sold all of my Santos (STO) call options, making a profit of over 25% in a few days. The reason for the sale below my price target in STO was that Oil has already rallied over 20% in 7 trading days, within a whisker of my target.
• The ASX 200 recovered some of its losses from yesterday, after ending 34 points higher (+0.6%) at 5913.• The banking sector outperformed today. ANZ closed 0.9% higher at $36.74 and CBA up 0.5% higher at $94.35. Today, subscribers received a live alert on Shawn’s transaction in purchasing a regional bank ahead of dividend and its current underperformance.• Telstra (TLS) rallied 1.2% higher at $6.38 as investors look for the yielding stocks yet again with a 55% chance of a rate cut factored in May.• Please watch out for the Hickman Report on Sunday.
Mergers and Acquisitions continue as Heinz merges with Kraft Food
Really bullish, there's more to go in the reflation rally
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