Australian Investment Blog

WHAT MATTERED TODAY

The buyers persisted today and the strong lead overnight flowed through to a reasonable day on the market today. Banks were weak, but this was offset with positive moves from the resource and energy sectors. Global stability helped turn the fortunes of the diversified financial sector around, with Janus performing strongly, but AMP remained in the naughty corner. Rio kicked off the first quarter production reports for the miners, and did it in style – more on this later.

All in all, a reasonable day for the broader market as the buying sustained. The index finishing up 20 points to 5861, adding 0.34%.

ASX 200 Chart

ASX 200 Chart

CATCHING OUR EYE

Broker Moves:

• Eastern Goldfields (EGS AU): Cut to Reduce at Hartleys Ltd; PT A$0.25
• Harvey Norman (HVN AU): Upgraded to Neutral at JPMorgan; PT A$3.65
• Liquefied Natural Gas (LNG AU): Rated New Market Perform at Wells Fargo
• OZ Minerals (OZL AU): Upgraded to Neutral at Credit Suisse; PT A$9.05
• Star Entertainment (SGR AU): Raised to Outperform at Credit Suisse

CYBG (CYB) $5.19 / -6.55%; down sharply today after announcing plans to increase provisions for payment protection insurance (PPI) as the amount of complaints rise above expectations. The PPI programs relate to poor advice given to clients of CYBG before it was spun out of NAB in 2016. The issues have been known for a while and we wrote about it July of last year, however the increase in claims has risen above our own expectations that the claims would total around or below what CYB had previously provisioned for, along with the £511m that the previous owner NAB had set aside. We hold CYB in the Growth Portfolio, and maintain the view that they are in good shape to manage this tough period as previously discussed.

CYBG (CYB) Chart

Rio Tinto (RIO) $78.96 / +1.11%; Rio released Q1 production numbers before the market opened, and seems to be on track for all aspects for the business except for the (relatively) small mineral sands. Guidance was lowered for Titanium and zircon production as operating issues have arisen in South African and Canadian operations. Although Rio is the largest player in titanium and second in zircon globally, they are only a small contribution to its bottom line. The market was looking for meet or beats on iron ore, aluminium and copper, and that was what was mostly delivered. The copper number was significantly higher than this time last year, which was likely the most important number in today’s release, as recent expansions at Escondida in Chile have delivered better quality at higher rates. Aluminium was also key as the recent much talked about price pressure will be key to Rio’s earnings in the months ahead.

Rio Tinto (RIO) Chart

OUR CALLS

No changes to the portfolios today

Have a great night

Harry & the Market Matters Team

Disclosure

Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.

Disclaimer

All figures contained from sources believed to be accurate. Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy. Prices as at 18/04/2018. 5.09PM

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