Market Matters Morning Report Thursday 30th June 2016

Morning Report 30/06/2016

Market Matters Morning Report Thursday 30th June 2016

Our views for the New Financial Year

We know subscribers enjoy Market Matters for our strong and clear opinions on where markets / stocks are heading, as opposed to general/non-committal commentary. With today the end of another financial year, what better time to put our head on the block for the months ahead. BREXIT is behind us, the Australian election is days away and Trump is on the horizon, hence there is plenty of news to keep the markets interesting into 2017.

We will look at the markets as a whole today and bore down into sectors and stocks over coming reports - any specific area you would like covered please do not hesitate to email us!

Equities

We maintain our bullish outlook for US equities to hit fresh all-time highs in 2016 - suddenly only 3.1% away! However, we may be very close to "hold on tight time" as the majority of investors who are sitting in cash may be getting uncomfortable very quickly, let alone the hurting shorts. Do not kid yourself, US stocks have shrugged off BREXIT as if it was an irrelevant event - the Dow is currently only down 93 points (0.5%) in June - a market that ignores bad news is a strong market.

US S&P500 Monthly Chart

Our technical view of US stocks suggests an explosion to the upside is not far away and perhaps the last 2 days are just the beginning.

US S&P500 Daily Chart

As mentioned yesterday, the UK FTSE has ignored BREXIT and is now actually up 2% for June!

UK FTSE Weekly Chart

Now moving onto the local market, which is definitely harder. Another encouraging sign comes from Asia, with the Hang Seng remaining bullish, targeting 10-15% upside. Taking other indices into account, our best guess for the ASX200 is continued resilience that may test 5600 but should easily reach 5300.

ASX200 Weekly Chart

Crude Oil US49.88/barrel.

No change, we remain bullish targeting ~$US60/barrel and hence we are still confident that our ORG position will reach the $6.20 area.

Crude Oil Monthly Chart

Origin Energy (ORG) Weekly Chart

Gold - $US1316/oz

We are keen to be long gold / gold stocks later in 2016, but currently believe there is a better than 50% chance that the precious metal will retest the US$1200/oz. support area.

Gold Monthly Chart

Interest Rates

We believe the world economy, led by the US, is stronger than the panic levels reached by bonds on Monday was implying. While we think that one more interest rate cut is likely for Australia, we believe it's time to start considering the risks for higher rates over the years ahead - there is a bond bubble forming with negative rates so prevalent!

Australian RBA Cash Rate Monthly Chart

US 10-year bond rates Monthly Chart

Summary

1. We remain bullish equities for 2016 and are not panicking with our holdings.
2. We remain bullish crude oil, targeting the $60/barrel area.
3. We remain bullish gold medium term but feel there is a greater than 50% chance of a pullback towards US1200/oz short term.
4. We believe Australian interest rates may fall to 1.5% but investors should start to consider higher rates over years ahead.

Watch for Market Matters alerts.

Overnight Market Matters Wrap

The US markets continued to forget the worries of Brexit and pushed higher last night. The Dow closed up 285 points (+1.6%) to 17,695, and the S&P500 closed again slightly stronger, up 35 points (+1.7%) to 2,071.
Oil was very strong last night after the US reported a stronger than expected draw down on stockpiles of 4.1m barrels, compared to the expected 2.4m. Oil closed up US$2.03 (+4.2%) to US$49.88/bbl.
Gold picked up on the back of a weaker US$ as investors’ appetite for safe assets remained strong.
The ASX 200 is expected to open around 70 points higher to the 5,215 area, as indicated by the September SPI Futures this morning.

Regards,
The Market Matters Team
28-34 O'Connell St
Sydney, NSW 2000

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 30/06/2016. 9:00AM.

Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The Market Matters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.

The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself or if you require a personal recommendation, you can seek the assistance of a financial adviser. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.

The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.

If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.

To unsubscribe. Click Here