Australian Investment Blog

WHAT MATTERED TODAY

A positive day for the local market, but probably not as bullish as a lot of traders were expecting today given the double whammy of good news. Firstly reports suggest a first stage trade deal has been agreed upon from both China and the US. And secondly, Boris Johnson looks to have won a healthy majority in the UK election despite articles during the week that the election would be a tighter affair. Both of these issues have been hanging over the market of late and equities took an interesting turn when both were resolved. Resources and energy were well bid over all as the global growth trade is on. Dr Copper in particular caught a bid, Oz Minerals (OZL) closed 4.87%. Gold however took a hit given the deflationary effect of lowering trade tariffs coupled with a positive move in the AUD, notably Evolution (EVN) –7.83%. A number of financials were well bid, particularly those leveraged into the UK market – Virgin Money (VUK) +7.71%, Pendal (PDL) +8.12% and Janus Henderson (JHG) +3.81% caught our eye. We own both PDL and JHG in the Growth Portfolio.

Although stocks closed in the black, the market was probably less positive than expected and a lot of that comes down to the bullish move in the Aussie dollar. Although US bonds were sold off and the Aussie 10-years mostly held their yield, the AUD finds a buyer in the risk on trade given our exposure to resources. The AUD closed around 1.5% higher than 4PM yesterday, enough to keep some pressure on the general equity bidding of the ASX. All-in-all the ASX200 closed just 22ps/+0.33% higher for the week.

At a sector level the risk on areas did best, IT was well supported however the Financials also had a day in the sun. On the flipside, it weas clear that interest rates sensitive sectors couldn’t find any love, particularly the real-estate stocks that fell nearly 2% as a group. Overseas, US Futures were higher while Asian markets were particularly strong.

Overall, the ASX 200 closed up +30pts or +0.46% today to 6739, Dow Futures are trading up 116pts/0.41%.

ASX 200 Chart

ASX 200 Chart

CATCHING MY EYE;

Sectors this week:

Stocks this week:

BROKER MOVES;

• Wisr Rated New Buy at Moelis & Company; PT 20 Australian cents
• Perseus Cut to Neutral at Macquarie; PT A$1.05
• St Barbara Cut to Neutral at Macquarie; PT A$2.60
• Regis Resources Cut to Neutral at Macquarie; PT A$4.50
• Pilbara Minerals Cut to Underperform at Macquarie
• OceanaGold GDRs Cut to Neutral at Macquarie; PT A$2.80
• New Hope Raised to Neutral at Macquarie; PT A$1.90
• Beach Energy Cut to Underperform at Macquarie; PT A$2.40
• Charter Hall Group Raised to Buy at UBS; PT A$12.50
• Charter Hall Group PT Raised to A$12.80 at Morgan Stanley
• Appen Raised to Buy at Bell Potter; PT A$27.50
• Afterpay Ltd Rated New Sector Perform at RBC; PT A$30
• Zip Co. Rated New Outperform at RBC; PT A$4.40
• Oil Search Cut to Hold at Morgans Financial Limited; PT A$7.82
• Charter Hall Retail PT Raised to A$4.10 at Morgan Stanley

OUR CALLS

No changes to the portfolios today.

Major Movers Today

Have a great weekend

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.

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