Market Matters Afternoon Report Thursday 14th April 2016

Afternoon Report 14/04/2016

Market Matters Afternoon Report Thursday 14th April 2016

Good Afternoon everyone

Market Data
***Index closed at 5118 – high of the day***

What Mattered Today

Another very strong session today with the two main sectors; Banks + Resources working in unison. The ASX200 put on +64pts to close at 5118…..Value was good (relative to recent weeks) with $5.2bn going through the mkt. It’s the first three day rally in almost a month – and the index is now up +225pts or +4.5% from the April 8th low of 4893…

We opened reasonably well – up about +40pts before tracking lower to 11am. Employment numbers came out at 11.30am then stocks were bid up for the remainder of the session….The Aussie Dollar traded above 77c again and there is now less chance we’ll see a rate cut this year – THUS - the Aussie should go to 80c….

The employment numbers were good – with the unemployment rate down to 5.7% v 5.9% expected. Importantly, 26,100 jobs were created in March, more than +20,000 predicted. It was more a rise in part time jobs than full time but it still goes a long way to alleviate concerns about a weakening labour market (and economy more broadly).

The recent bank sell off has been a result of FEAR about rising bad debts. Rising bad debts occur during periods of economic weakness. Unemployment should be rising IF the economy is weak, yet it’s not – it’s actually falling. Housing was another FEAR FACTOR for the negativity towards the banks, yet a housing CRASH is unlikely if unemployment is low – and the labour market is reasonably tight. So, the stronger than expected employment data today is another incremental positive for the banks.

In conjunction with this, fears of a RESOURCE led spike in soar loans (think Arrium) was playing on investor minds, yet we’ve seen a BIG rally in resource companies globally. BHP up another +5.3% today to $18.87…RIO +2.57% to $48.60....So that argument around stressed resource coys starts lose momentum as well.

Stocks & Sectors Today

Source; Bloomberg

We talked about the DOGs of the ASX in recent times starting to cop a bid…Worley Parsons (WOR), Mineral Resources (MIN)…chart below and throw Whitehaven Coal (WHC) into the mix. WHC is actually a very interesting story – heavily shorted, reasonably high debt BUT good operational momentum. At 73c it’s marginal however worth a look sub 60c….

QBE Insurance (QBE)….up +3.45% today to $11.39 also looks interesting after bobbing along bottom for a long period of time. Reasonably new management starting to capture the markets attention with consecutive beats on earnings, which in recent years have been rare. A similar thing happened in Newcrest (NCM) after they got their act together with Lihir…The market is sceptical for a long period, then it’s not, and the stock rallies. QBE worth keeping on the radar. It’s on ours.

ASX200 Movers

***What Matters Tonight***

European leads are mixed with the FUTURES on the FTSE -2.5pts, DAX +42pts & CAC –3pts.

In the U.S, DOW FUTURES are off -40pts, S&P 500 FUTURES are off -5pts
JP Morgan out last night and beat expectations but saw revenue fall due to exposure to shale oil. The stock was up 4.23%.

Out tonight we have Blackrock / Delta Air / Wells Fargo / Bank of America

Regards,
The Market Matters Team
Level 12 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 14/4/2016 4:30am
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