Australian Investment Blog

WHAT MATTERED TODAY

The local market came off the boil today, giving back around half of yesterday’s gains, tracking back towards the 6000 level again. The ASX failed to join in on the overnight strength, opening marginally higher before gradually selling off throughout the session. For now it seems the Australian market is far more concerned with infections compared to other global equity indices given today’s selling really started to kick following the announcement that Victoria had posted another record daily infection count. While avoiding a stage 4 lockdown, Daniel Andrews did continue to restrict activity, this time on non-urgent surgery in an attempt to keep the health system flexible and prepared.

There was an array of data out today as well. Firstly, local employment data printed largely inline. Unemployment rose to 7.4% despite 210k jobs being added in the economy. The rise being attributed to an increase in the participation rate, jumping more than expected to 64%. These figures do hide the drop in full time positions with part time adding nearly 250k for the month – underemployment is rising under the hood. China data was also out throughout the day with their GDP number beating year on year while industrial production hit expectations on the nose.

From a stock point of view, Whitehaven (WHC) stood out with the coal name finding some buyers following Glencore announcing they would be cutting thermal coal production. We discuss Alumina (AWC) below with JV their partner announcing 2Q earnings. Industrials & communications sectors managed to close in the green despite the broader market weakness.

Overall, the ASX 200 added -42pts / -0.69% to close at 6010. Dow Futures are trading down -101pts / -0.38%

ASX 200 Chart

ASX 200 Chart

CATCHING MY EYE:

Alumina (AWC) +2.37%: joint venture partner Alcoa came out with their quarterly earnings pre-market and it was a good read-through for the ASX listed Alumina. The announcement shows $US108.5m has already been passed through to AWC for their stake in Alcoa’s Alumina business with one more cash sweep expected before the half year results are announced. This already accounts for a half year dividend of US3.4cps, a ~10% beat to what the market was predicting even before the final top up. The figures point to a bottoming of the alumina commodity price in the 2Q while production remains robust. We like AWC, and own it in the Growth Portfolio

Alumina (AWC) Chart

BROKER MOVES:

• Zip Co. Cut to Sell at UBS; PT A$5.70
• Woodside Cut to Neutral at Citi; PT A$22.33
• Southern Cross Media Cut to Neutral at Macquarie
• Iluka Cut to Hold at Morningstar
• Sandfire Resources Cut to Hold at Morningstar
• Origin Energy Cut to Hold at Morgans Financial Limited
• Regis Resources Cut to Hold at Canaccord; PT A$5.75
• Saracen Mineral Cut to Hold at Canaccord; PT A$5.80
• Whitehaven Raised to Buy at Shaw and Partners; PT A$2.50
• TPG Telecom Rated New Add at Morgans Financial Limited
• Paradigm Biopharma Cut to Speculative Hold at Bell Potter
• Whispir Cut to Hold at Ord Minnett; PT A$2.80

OUR CALLS

No changes today

Major Movers Today

Have a great night

James, 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.

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