Resilience shown today by the market – particularly the resources
Yesterday we saw the market open firm and close weak while today we saw the opposite play out, weakness early gave way to strength in afternoon trade particularly in the resource sector as flagged in the AM report today.
On the broader market today, the Material sector led the charge adding +0.34% while the interest rate sensitive Utilities saw most selling, and finished down -1.46% - an overall range of +/- 36 points, a high of 5721, a low of 5685 and a close of 5714, off -6pts or -0.10%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Fortescue was strong today adding +3.84% to close at $4.87 following another broker upgrade, this time from Bell Potter which upgraded their call from SELL to BUY with a price target of $5.55. They must have been reading the Shaw and Partners report out the prior day which made the same call with a double upgrade to BUY and $5.50 price target. Peter O’Connor, Shaw’s Resource Analyst is the best in the business in our view and has called FMG well in recent times. We were ahead of both but it’s encouraging to see the mkt start to come around from such a negative bias.
We own Fortescue from $4.66 and todays price action is encouraging.
Fortescue Metals Daily Chart
We pulled the trigger on QBE Insurance (QBE) this morning, adding another 3% to our existing 4% holding around $11.60 – we now have 7% in the stock which closed at $11.77, up 1.29%. The stock closed well today and for now looks reasonable. The recent downgrade was clearly disappointing and deserved a sell-off in share price, however we suspect that it’s now overdone with a portion of the selloff being emotionally driven – given their poor track record in recent years. The stock is now cheap (in our view) and the mkt is pricing more bearish assumptions in terms of margins than we think the company will deliver – however, it will now take time given management will get zero benefit of the doubt from the mkt. The upside kicker – the X factor, is if interest rates and currency markets move in their favour, as we think they will.
We’ll review our call on all general insurers in the AM report tomorrow.
QBE Insurance Daily Chart
Have a great night
The Market Matters Team
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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 27/06/2017. 5.00PM.
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