Market Matters Afternoon Report Thursday 14th July 2016

Afternoon Report 14/07/2016

Market Matters Afternoon Report Thursday 14th July 2016

Good Afternoon everyone

Market Data

What Mattered Today

Stocks higher for a sixth straight session today with the index closing at its highest level since 11th August 2015 – an 11 month (closing) high for the ASX 200. As always, pessimism remains high yet stocks are climbing the wall of worry – breaking out, potentially into a new trading range where 5400 becomes support.

This fits with our bigger picture view of US stocks with both the S&P 500 and DOW JONES making new all-time highs in recent days. Interesting to think that our market is still 21% below our all-time high of 6851 - which seems a long way from here.

On the market today we had a range of +/-30pts. 5386 low, 5416 high and a close at 5411; up +23pts or +0.43%.

Unemployment data out today by the ABS, printing +7,900 jobs – below the 10k predicted while the unemployment rate stayed steady at 5.8%. On the face of it, the data seemed a tad weak however the composition was very strong, which is contrary to last month’s print. +38,400 new full-time jobs were created while -30,600 part-time jobs were lost. The participation rate ticked higher which is another good sign. The Aussie Dollar ticked up on the number given interest rate cuts less likely. The AUD now trading at 76.3c.

Bluescope (BSL) topped the leader board today – up +7.24% on an earnings upgrade saying higher steel prices were helping margins. Interesting, given that view, is being supported by resilience in the Iron Ore price and strong support for the Iron Ore stocks – although they came off the boil today – Fortescue (FMG) the weakest link down -4.09%.

Bellamy’s (BAL) was a stock we spoke about in yesterday’s afternoon missive – and it’s started to move higher today – up +4.98% on twice the volume of yesterday (1m shares). There're 9.5m shares sold short here – which is a shade below 10% of the company. It’s the 7th most shorted stock which opens it up for a decent bounce when shorts start to cover.

Golds saw some selling today as global macro concerns abated somewhat. It would be hard not to lock profits in on these stocks post their very strong run up in price. Most likely get another opportunity to re-enter on a pull back in coming months…. Newcrest (NCM) indicative of the sector today down -3.44% to $25.30 – which is still a nosebleed price.

…and finally the Oil stocks were weaker today following a -4.5% decline in Crude overnight. Some charts worth keeping a handle on for those trading the sector as we are;

US Crude production continues to ease.

Source; Shaw and Partners

Onshore rig count still down 79% off its post-2000 high of 1992. Starting to pick up though with 421 onshore versus late May low of 380.

Source; Shaw and Partners

Sectors Today

Source; Bloomberg

ASX 200 Movers

What Matters Overseas

….Lots of data coming from CHINA tomorrow headlined by Chinese GDP. 6.6% expected v 6.7% in Q1.

Source; Trading Economics

The trend is still clearly down, however, we’re starting to see commodity prices + commodity stocks rally. Clearly, the risk tomorrow sits in the resource sector with a weaker than expected print likely to get be met with the selling of the resource names, amplified by the BIG run up in share prices we’ve seen over the past few weeks.

Source; Trading Economics

FUTURES pointing to a higher open tonight….

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 14/07/2016. 5:00PM.

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