Big sell off the wrap up a choppy FY17
The market sold off hard today with weakness early, a couple of tentative attempts to get off the mat before another strong wave of selling late in the session to wrap up what’s been a very choppy FY17. The year started out getting over the BREXIT hangover with the market rallying strongly from the 5233 mark on the ASX 200. We had the final rate cut by the RBA in August before Donald Trump surprisingly won the US election in November. This put some fire in the belly of the market which rallied strongly into the May high of 5956, and we now find ourselves closing out the year at 5721, an overall gain of 9.3% for the ASX 200. The best year in the last 3 despite a soft finish today.
On the broader market, the Energy, Material and Financial stocks (i.e – the reflation trade) performed best in a relative sense. We had an overall range of +/- 83 points, a high of 5804, a low of 5718 and a close of 5721, off -96pts or -1.66%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
When the market sells off like it did today, it’s worthwhile looking under the bonnet to see what areas saw most pain and what areas held up in a relative sense. Once again, the Financials and Material stocks were reasonably well supported in a weak market with the likes of Fortescue closing up, RIO was down only -0.19% while the banks were down somewhere between 1-1.5%. We added another 2.5% to Westpac this morning taking our total holding to 7.5% of the MM portfolio.
Westpac (WBC) Daily Chart
Once again it was the ‘yield play’ stocks that were under most pressure, with Sydney Airports off by -2.34%, Transurban down by -2.39% while there was some big selling amongst the real estate stocks, Mirvac down by -3.18% and GPT off -3.82% - which highlights how close investors are to the jump seat in these type of stocks. Safe, defensive, low risk stocks can certainly have big moves!!!
Sydney Airports (SYD) Daily Chart
We’ve been active in the Media this week with some interesting discussions with Fund Managers, from both Wilson Asset Management, and Aitken Investment Management. Firstly, BUY HOLD SELL for Livewire featured James Gerrish this morning, in a recording done last week. The video covers The dogs of FY17 asking the question if the companies currently in the ‘dog-house’ will keep howling next year, or if they might just get their bark back.
We also cover some key macro issues with Charlie Aitken from AIM, concluding that volatility is sure to tick higher – and it certainly has this week. To watch that video – click here
Happy end of Financial year for all of us at Market Matters!
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