Mixed fortunes as ASX rallies of lows
A tail of two sectors today with the banks roaring back from early weakness while the Resources suffered from continued selling in Chinese Iron Ore and Steel Futures which have traded at their lowest level in more than 6 weeks. Energy was strong on the back of higher Crude prices overnight. A range today of +/- 41 points, a high of 5749, a low of 5698 and a close of 5747.
ASX 200 Intra Day Chart
ASX 200 Daily Chart
A good chart from Chris Weston over at IG in a note today highlighting the rising inventories of Iron Ore – which as can be seen from the dark grey line is at or above decade highs . Typically re-stoking takes place ahead of Chinese new year however we’ve haven’t really see a drop off post that period which would usually be expected. One theory that has been doing the rounds and we discussed this with Nev Power from FMG last week, is around the desire of Chinese policy makers to maintain a strong Steel price going into the Peoples Congress in October. High Steel prices mean mills are less price sensitive to inputs such as Iron Ore, therefore the price remains supported. The issue with this theory is the high proportion of speculative trading that now goes on, which means the price can’t be as easily manipulated / supported!!
There was a big trade crossing in Myer today with around 10% of the company changing hands at a slight premium to the market when it was done at $1.15. No single holder has such a large stake so it’s a collective sell down with the buyer tipped to be Solomon Lew. 81.7 million shares crossed which is a big slice however if it is Lew, you’d bet your bottom dollar there’s a larger plan at play and this will just be the start. We’ll know soon enough. Shares in MYR closed up 19.5% to $1.26.
Myer (MYR) Daily Chart
Elsewhere, UBS were busy in the market again offloading shares in DOW, for a 40c loss after underwriting the recent cap raising to acquire Spotless. A smaller ($9.4m) loss on this transaction which is clearly a better result than their previous underwriting efforts for Arrium (ARI) a short while before they called in the administrators.
Downer (DOW) Daily Chart
....and Suncorp is reporting no impact from Cyclone Debbie with reinsurance covering costs, which is obviously as relief however it also speaks to SUNs strategy about reducing (as much as economical) exposure to big one off hits....We continue to like Suncorp (SUN) and it remains a core holding in the MM portfolio
Suncorp (SUN) Daily Chart
Have a great night,
The Market Matters Team
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