What a week!
What Mattered Today
A massive week of global turbulence with the Election of Donald Trump as ‘leader of the free world’ which translated into an extraordinary amount of market volatility – but overall the adjustment towards Trump's stimulatory policies, specifically around financial regulation, taxation, infrastructure and defence has seen the market rally hard. For the week the ASX 200 has put on than 2.3% while the S&P 500 in the US is up around 3.77%. Clearly, the reaction post the vote has been polarising and that will likely continue for some time. The issue now for markets is around whether or not he softens some of his harder line views and probably more importantly in the near term, who he put’s into key rolls. There is some talk that JP Morgan’s boss Jamie Dimon might get the nod as Treasury Secretary which would clearly be very market friendly.
Anyway, a lot of water to go under the bridge however it seems very clear from the markets reaction they’ll be some sectors to benefit and others that won’t. Clearly, it would seem that financial stocks are one the main beneficiaries courtesy of less regulation, and a more relaxed positon on capital plus if US interest rates go higher on the back of an uptick in inflation that should relieve some of the margin pressure they’re currently experiencing. We’ve got Com Bank (CBA) and Westpac (WBC) in the portfolio as well as a position in Suncorp (SUN). Today we see CBA put on +3.44% and WBC up 3.07%.
The other interesting aspect as we’ve spoken of recently is the sectors/ stocks / investment themes that will struggle. The yield play will likely come under pressure and we’ve seen this play out already – but there was another obvious leg down this week. If we look at the chart of CBA versus Telstra (TLS) over the last 5 days, the trends become fairly obvious. Since trump was elected, Financials have rocketed and the yield trade has suffered – about a 6% variance in the performance of TLS v CBA. It will be extremely important going forward to be in the right sectors. It seems to us that investment markets, although positive this week are about to head into a very tricky period and we’ll need to be more active to generate performance.
Commonwealth Bank (CBA) v Telstra (TLS) this week
On our market today, we had a more subdued session with a range of +/- 37 points, a high of 5370, a low of 5333 and a close of 5370, up +41pts or +0.79%. Again, BIG value day on the ASX with $7.65bn
ASX 200 Intra-Day Chart – BIG rally into the close today
ASX 200 daily chart
Sectors
ASX 200 Movers – GOLDS continue to come under pressure
Select Economic Data - Stuff that really Matters in Green
What Matters Overseas
FUTURES mixed…
Have a great weekend and keep an eye out for our bigger picture overview on Sunday morning
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 11/11/2016. 5.20PM.
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