Markets supported as trade talks progress (VOC, BWX)
WHAT MATTERED TODAY
It was shaping up to be a lower open to trade this morning before US Futures came online and rallied – the S&P up by +0.60% while the Dow Futures put on +200pts on the back of easing trade tensions between the US and China. The US Treasury Secretary Steven Mnuchin suggesting on Saturday that "We are putting the trade war on hold. Right now, we have agreed to put the tariffs on hold while we try to execute the framework." So – the trade war on hold for now = positive for stocks although I doubt this will be the last of it. Typical Trump – goes hard, imbeds himself into a better negotiating seat then gives a little of the ground back that he’s just taken. The North Korean Dictator seems to like that tactic as well – sort of seems to work!
Our market opened well then gave back some of the earlier optimism – Commonwealth Bank (CBA) again on the nose flirting with the $70.00 handle throughout the day eventually closing at $70.09 down 41c, while Westpac and NAB were also weak. Elsewhere, CSL lead a strong run for healthcare names on the back of a flow of broker upgrades on the back of Fridays earnings uplift. We’re now seeing some BIG optimistic target prices for the stock that seems to continue kicking goals – Citi now looking for $215 TP – we’ve gotten this stock wrong, owned it, made money but it’s a drop in the ocean of what could have been! Still, we’re not there and have no appetite to chase.
Overall, the S&P/ASX 200 index lost -0.05 percent to close at 6084, down -3pts for the day.
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Broker Moves; CSL the main focus today with bullish broker notes dominating play, although most simply playing catch up to the share price…stock added another 1.73% today to close at $186.12
Elsewhere….
- APA Group Resumed at Ord Minnett With Buy; PT A$9.55
- Computershare Downgraded to Sell at Morningstar
- Vocus Upgraded to Buy at Morningstar
- Boral Downgraded to Underperform at Credit Suisse; PT A$6.40
- Asaleo Care Cut to Underperform at Credit Suisse; PT A$1.30
Vocus Group Ltd (VOC) $2.46 / +4.24%; the stock popped on the appointment of Kevin Russell into the top job today as MD & CEO of the group. Mr Russell comes with good experience in the Australian retail telecommunications market, having been the retail executive at Telstra, and CEO of consumer at Optus. He was also in the top job at Hutchinson Three UK between 2007 & 2011, starting at a time when the business was under fire running heavy losses, before turning it into a solid business over his time – experience he will no doubt lean on in his new role at the battle hardened Vocus. The appointment is short term positive for the company, we like the stock technically however Vocus will come under pressure if it fails to deal with current debt levels – the risk of a capital raising remains high.
Vocus (VOC) Chart
BWX Limited (BWX) $4.41 / - ; Was in a trading halt today after receiving a bid from the current CEO John Humble and the Finance Director Aaron Finlay with the support of private equity firm Bain Capital. For those not familiar with the company, they make and sell skin and hair care products under brands like Sukin, Mineral Fusion, DermaSukin and a number of others – the bride knows them well! The stock has had a tough run on the back of weak earnings but this is a strong bid at $6.60 a share, although still below the recent peak. The is subject to a few conditions but it’s a bold move from the CEO! I liked this stock, have never owned it – always seemed too expensive which means we missed the up, but also the down.
BWX Limited (BWX) Chart
OUR CALLS
No changes to the MM Portfolios today
Have a great night
James & the Market Matters Team
Disclosure
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Disclaimer
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 21/05/2018. 5.00PM
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