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Australian Investment Blog

Technical Views 13/12/2018

Midday Market Movers: Dogs of the ASX rebound on global optimism

We might finally be seeing some tentative signs of the elusive Santa Rally with the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index rebounding from early losses to trade up 0.3% at the time of writing. The market is being driven by headlines and not fundamentals as some of the most beaten down ASX shares are among the best performing stocks this morning. You could credit the positive trading session to the re-instatement of British Prime Minister Theresa May back into the top job and a more positive tone US-China trade dispute but these events in themselves do not explain why ASX stocks are suddenly worth more today. Shareholders in embattled wealth manager IOOF Holdings Limited (ASX:IFL) won’t be complaining though as the IOOF share price surged 7.2% to $4.83 during lunch time trade – making it the best performer on the ASX 200. The sharp rebound comes after a big drubbing in the IFL share price on worries that its acquisition of OnePath business from the Australia and New Zealand Banking Group (ASX: ANZ) is in jeopardy after APRA took the unusual move to start legal action against the group, which forced its CEO and chairman to take a leave of absence. You’d be surprised at what a little pick-up in risk appetite can do for beaten-down stocks although the risks towards IOOF has not lessened. Another stock rebounding on stronger sentiment is ASX-listed UK-bank CYBG PLC/IDR UNRESTR (ASX: CYB). The CYBG share price jumped 6.4% to $3.43 to become the second top performer on the ASX 200 as hopes that the failed attempt to oust Theresa May will help the UK reach a Brexit deal with the European Union. Again, the share price rally is not fuelled by fundamentals as the CYB share price got hammered following last month’s profit update that suggested the bank could struggle to deliver meaningful profit growth regardless of the Brexit outcome. The rest of the ASX stocks that make up the top five outperformers on the ASX 200 leader board include underachievers like the Syrah Resources Ltd (ASX: SYR) share price, the Adelaide Brighton Ltd. (ASX: ABC) share price and the Seven Group Holdings Ltd (ASX: SVW) share price.

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