Market about to shut the door on a weak May
A reasonable session on the ASX yesterday with the market shaking off early weakness to close back up in the black by 10 points and importantly, the 5700 region continues to hold. Today marks the end of a tough month for the ASX with big underperformance versus the US and other global markets. The S&P 500 is up +1.20% for May while the ASX languishes down –3.48%. The banks obviously the major drag with the index off -11.98% for the period – ANZ the weakest link down by 14.84%, although it did trade ex-dividend in the period. We’ve continued to use weakness in the banking space as a buying opportunity.
In terms of the ASX 200, there was some small signs of a more robust underbelly yesterday with the market once again bouncing from 5700 as it’s done on three previous occasions. Clearly this becomes the tipping point for any short term view on the market and given the seasonal weakness that still lingers in June, a break of the 5700 level should see 5600 come into play in short order.
ASX 200 Daily Chart
Yesterday we ‘tweaked’ the Market Matters portfolio by reducing our holding in Henderson Group by 3%, leaving us with 5% of the portfolio in the stock which we continue to like. We bought BT Investment Management allocating 5% of the portfolio. This increases our exposure to European facing managers by 2% overall which is a theme we see further upside in.
BT Investment Management (BTT) Weekly Chart
Last night we hosted Market Matters Live in Sydney, with over 400 people in attendance - an event designed to present different, original and wide ranging views on the market. Martin Crabb, Chief Investment Officer at Shaw and Partners set the scene with a top level look at global economies with a specific focus on China. Jason Huljich gave an update on commercial property markets in Australia sighting Brisbane as a city that looks good in terms of office assets. Charlie Aitken from AIM gave a very well received spiel on why we should be investing in Europe over and above the US and made some pretty compelling points around active versus passive management – with the conclusion that now more than ever is the time to be active – sound familiar! While James Gerrish expanded on the trends we see historically in terms of bull and bear markets, why we are likely to track higher in the medium term before a correction plays out for global equities.
A great night and thanks to all those who attended.
Conclusion(s)
No real change today, with the MM portfolio now sitting in 19.5% cash following yesterday’s portfolio moves.
We continue to think the bulk of the banks downside move has now played out
Overnight Market Matters Wrap
· Amazon shares traded above $US1000 for the first time as a rise in tech stocks offset losses in banking and energy stocks.
· US personal spending and core inflation was in line with expectations while consumer confidence fell to 117.9 in May, below consensus of 119.5.
· Oil fell, base metals were mixed and iron ore was flat.
· The June SPI Futures is indicating the ASX 200 to open marginally lower this morning from the previous close of 5,715.
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.
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