Market Matters Afternoon Report Wednesday 28th September 2016
What Mattered Today
Another session where we saw the index tick around that 5400 level we’ve highlighted in recent reports with the best of it seen early on. Selling kicked in from around 10.30am, the market backed out between 12 & 2 before a whimper of a rally into the close. A range of +/- 36 points, a high of 5435, a low of 5399 and a close of 5412.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Australia continues to struggle in terms of productivity ranking 22nd among our neighbours in the Asia Pac and hardly worth a mention in terms of Global rankings. Hard to believe the Kiwi’s were 9 places ahead of us at 13!
Source; Global competitiveness report 2016-17
AGL (AGL) was a standout today – putting on +5.77% to close at $18.70 after announcing a 5% share buy-back while they also issued profit guidance for FY17 (underlying basis) of $720-$800m – which is a big range but about inline with expectations. They also lifted their dividend payout ratio from ~65% to 75% with a minimum franking level of 80% - which should flow through to a lift in divi for FY17 of 13.5% and FY18 by 15%.
AGL (AGL) Daily Chart
Nickel stocks were again in focus today following after the Philippines said three-quarters of its mines fell short in an environmental audit, with 20 mines facing suspension unless they can respond to shortcomings within days, on top of the 10 already halted. (AFR). The Philipines is the biggest supplier of nickel ore to China and this recent development should be supportive of our Domestic Nickel coys. We’re looking for Independence Group (IGO) to trade up to our $4.50 target v today’s close at $4.25.
Independence Group (IGO) Daily Chart
On the other side of the ledger, QBE Insurance (QBE) continues to struggle and now trades at the lowest level in around 13 years – and it looks like going lower. We’ve tossed up buying QBE numerous times in recent weeks but the trends in global commercial insurance premiums remain weak, and QBE continues to struggle as a result. The BIG macro play that QBE is often touted as seems illusive at this stage…although we do think QBE will turn at some stage. Right now, the selling is not impulsive and we haven’t seen that ‘capitulation’ style event that would suggest a low is finally in place.
QBE Insurance (QBE) Daily Chart
Woolworths (WOW) was up today by 2% to $22.97 after winning its legal battle against Lowes – it’s JV partners in the Masters debacle. Lowes were accusing Woolies of "oppressive" and "prejudicial" behaviour and acting in bad faith, and they wanted to appoint a liquidator to oversee the "equitable and orderly wind up". That hasn’t floated with the courts and Woolies is now free to clean up their own mess. No change to our short term negative view on Woolies, however, we’d start to look again if it traded nearer $20
Woolworths (WOW) Daily Chart
We’ll have a look at ‘Short Selling’ Interest in tomorrow afternoons note
Sectors
ASX 200 Movers
Select Economic Data - Stuff that really Matters in Green
What Matters Overseas
FUTURES MIXED… Deutsche Bank shares up +2.5% on open in Europe!!
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 28/09/2016. 5:00PM.
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