Coordinated buying in banks + materials – a change in recent form! (AWC, QBE, MQG, CNI)
Another day of buying in Aussie stocks with the Financials and Materials seeing coordinated buying – a rare event in recent times! Overall, the financials put on +1.30% to lead the charge while most weakness was felt in the Utilities which lost -0.90% - an overall range of +/- 43 points, a high of 5764, a low of 5721 and a close of 5746, up +33pts or +0.58%
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
The Financial stocks did well following an upbeat session on Wall Street, but more importantly, bond yields have tracked higher in the States and elsewhere which bucks the recent trend. This Mornings note asked the question whether or not is was time to switch from bullish bets on commodities to bullish bets on the banks, and although both were strong today, that trade may take some time to play out. It generally takes a few attempts to break a defined trend, so expect some volatility but and overall bottoming process to play out in the banks while the opposite looks likely amongst the material stocks.
To that end, Alumina (AWC) traded up +2.31% to close at $2.21 and continues to look strong despite paying a recent dividend while BHP also snapped back above $27 to close +1.19% higher. We’re being vigilant on both stocks for potential levels to sell into strength, although slightly higher levels are our clear preference.
Alumina (AWC) Daily Chart
QBE was in focus today, eventually closing up by +2.54% on the announcement of a new CEO – as one Analyst suggested in our morning meeting today, the mkt was waiting for him to be sacked anyway after the recent woes! Probably a bit harsh however the news was met with buying, although that was also helped by the downgrade of Hurricane Irma and a slight but positive change around US interest rate expectations. The current CFO Pat Regan will take over CEO on 1st Jan 2018.
QBE (QBE) Daily Chart
Macquarie was also bid up again today, adding another +2.29% to close at $87.10, however after two days of buying post their re-confirmed guidance + an upgrade from UBS yesterday the stock is starting to look exhausted. On paper the silver donut looks cheap trading on 12x ex its upcoming dividend however the trading action continues to look poor technically – 50-50 at best and better opportunities elsewhere in our view. When something looks good on paper, analysts like it yet the share price is not reacting sin a positive way, it’s worthwhile being wary…
Macquarie (MQG) Daily Chart
Centuria Capital (CNI) – A stock we hold in the MM Income had another good session today adding +4.96% to close at $1.375. Obviously a good run on some recent corporate news + a void of sellers, however we now start to consider levels to be a seller of this stock – something we’ll cover in the Income Report out tomorrow. Stay tuned!
Centuria (CNI) Daily Chart
Have a great night
The Market Matters Team
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