Sellers dominate the week
WHAT MATTERED TODAY
**A small section of subscribers may not have received a report yesterday afternoon due a technical glitch. The report is available on our website here**
The equity sell off continued into its seventh straight day today as the local market ended today at 6143, down -176pts on the week and now down from the recent high of 6373 set on the 30th August. We witnessed a full 5 days in the red this week with falls of -0.14%, -0.28%, -1.00% -1.12% & another –0.27% today, although we did see a strong bounce from the earlier lows this morning. Growth was again on the nose with healthcare amongst the worst sectors of the day thanks largely to another 3% decline by CSL while we’ve seen some decent flow out of the resources space over the course of the week, today those with Energy exposure felt most pain. Oil has been more or less protected from the general sell-off thanks to Saudi Arabia’s target to keep oil between $70 - $80/bbl, however it cracked lower overnight and we’re now likely to see some outperformance on a relative sense from the likes of RIO and FMG versus BHP.
On the flipside today, Consumer staples copped a safety bid with Woolies up 0.18% while Wessies put on +0.84%. In other oddities, two heavy weights in the index closed higher despite the broad based nature of the recent selling – CBA closed up +0.53% while RIO added +1.71% on the back of a bounce in the Iron Ore price from oversold levels. We own RIO and CBA in the Growth Portfolio.
It seems that weakness is pre-empting an escalation in the trade war between the worlds two main super powers with the China-US ‘cease fire deal’ expiring this weekend and neither country looks like backing down at this stage. That said, markets often sell the rumour, buy the fact as the eventual outcome is less severe than originally thought – this has proved typical during Trump’s presidency.
We covered our thoughts on 6 growth stocks this morning, one being Aristocrat Leisure (ALL) concluding that we’d be a buyer around $29.25 or another ~3% below yesterdays close. This morning the stock traded down to $28.95 before closing at $29.60. We didn’t add this to the portfolio today and will re-assess early next week, however we do remain keen on the gaming technology provider.
Overall, the index closed down -16 points or -0.27% today to 6143 – down -2.78% on the week
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Broker Moves; A few notes out on Graincorp (GNC) recently with some saying that they may get an even smaller crop in FY19 compared to FY18, which will likely impact earnings amid low carry-in volumes from the earlier period.
Elsewhere;
· AGL Energy (AGL AU): Cut to Underperform at Credit Suisse; PT A$17.70
· Challenger (CGF AU): Upgraded to Buy at Morningstar
· MOD Resources (MOD AU): Rated New Buy at Arden Partners
· Newcrest (NCM AU): Upgraded to Buy at Morningstar
· Sigma Healthcare (SIG AU): Cut to Underperform at Credit Suisse; PT A$0.48
Weekly Moves – Stocks & Sectors;. On a sector level, the telcos outperformed this week, actually ending higher with the help from Telstra’s downgrade but an upgrade yesterday, while Vocus also had a great week. On the other side of the ledger, growth sectors of IT and Healthcare were both down over -6%
Sectors over the past Week
At a stock level, Northern Star was spared from the onslaught thanks to their Alaskan acquisition. Afterpay and NextDC gave back some strong performance as profit taking was on the cards and growth was sold.
Stock moves over the week
OUR CALLS
No changes the portfolios today, although we were close to pulling the trigger on ALL.
Watch out for the weekend report. Have a great night,
Harry & the Market Matters Team
Disclosure
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
Disclaimer
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