Materials & Energy weak – Banks strong
The market drifted lower today in aggregate however there was a big cross section of performance from a sector perspective. The 18pt drop on the market came courtesy of the resource stocks with BHP , RIO, Fortescue & South 32 accounting for -20 index points….BHP going Ex-Dividend by 52cps didn’t help but a drop of $1.27 (-5.03%) was obviously an overshoot to the downside. We stepped up and bought BHP today after ‘stalking’ the stock for a few months - remaining patient and buying into weakness. ~$24 is an attractive level in our view for a 5% allocation with the option of adding an additional 2.5% in time. We also have a short position in Fortescue (FMG) which is nearing our $6.00 target…closing down 3.85% today at $6.25.
Elsewhere, we put an alert out this morning to BUY Regis Resources (RRL) allocating 2.5% of the portfolio around $2.95. The stock opened lower ($3.03) and dropped to $3.01, hit a high of $3.12 and closed at $3.05. We didn’t buy any given our suggested level was sub $3. To ensure clarity, when we suggest ~$2.95 this typically means within 1% of that number, however it will be dependent on the individual stock / volatility / liquidity etc. There is no silver bullet to this and judgement clearly comes into play. In Terms of RRL now, remain patient, we have left our order to BUY at $2.98 and will run with that till close of trade tomorrow before removing it.
Across the rest of the portfolio, Banks continue to be well supported with our positions in CBA and ANZ benefitting here. Star Entertainment (SGR) has been a bit of a sleeper but is now trading at $5.13 – after trading ex-dividend towards the end of February. We continue to see higher prices for this stock as the market re-weights following a tough end to 2016. Ansell (ANN) is also starting to move higher with our $25 price target becoming more realistic by the day. QBE was down today by 2.18% or 28cps to close at $12.59, however it was ex-dividend by 33cps so a very good result. We own QBE from $10.49. Macquarie (MQG) has been muted for a while now , very tight ranges and fairly low liquidity, however we continue to target $90 for that stock.
On the market today, we chopped around for much of the session , but finished down by the end with a range of +/- 31 points, a high of 5760, a low of 5729 and a close of 5741, off -18pts or -0.32%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Have a great night,
The Market Matters Team
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