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ASX up but off session highs – go the Sea Eagles!

James Gerrish

Market Matters

A big week comes to a close with a weekend filled with footy headlined tonight with the Mighty Sea Eagles taking on Souths, while I’m not trekking out to ANZ Stadium like a true supporter (not many from the insular north do) I’ll be in front of the screen...then of course the Wallabies kick off their World Cup campaign tomorrow at 2.45pm.

The market peaked early again today with the index ripping up into an 11am high as what looked like a decent size program buying of futures which flowed through to stocks. The buying picks up when the AUD pulls back and vice versa, overseas money drifting towards the region that is more likely to cut interest rates by the look of it. These sort of moves are often transient, they last for days rather than weeks. It’s been a theme the last few sessions which have been stronger than the overseas markets implied. Anyway, they were back at it this morning before the market drifted away into the close – finishing on session lows.

While our ‘gut feel’ is the local market is losing steam, no sell signals have been generated for now – although the weak close today with the index finishing -45pts from the high is a bearish indicator. We’ve turned our portfolios more defensively into the recent strength – increased cash + defensive positions like Gold – Evolution (EVN) and Newcrest (NCM) in the Platinum Portfolio, both doing well today adding +2.8% & 2.3% respectively .

Asian markets were quiet today, ditto for US Futures which were marginally higher through our time zone. After a week where Central Banks / Monetary policy has been front and centre, the focus will switch back to trade next week with the trade deputies from the US & China set to meet. I have the feeling that a trade resolution will be a buy the rumour, sell the fact sort of scenario, but time will tell.

Overall today, the ASX 200 closed up +13pts or +0.20% to 6730. Dow Futures are trading up +24 points or +0.09%

ASX 200 Chart

ASX 200 Chart

CATCHING OUR EYE

Sectors this week: Energy down from earlier highs this week however some optimism still being priced for tighter supply. All sectors closed higher this week while the index added +0.92%

Stocks this week: Bellamy’s bid, Premier Investments (PMV) delivered strong results today thanks to Smiggle, while the Gold stocks found form. Bingo (BIN) remains on our radar to re-enter but we’re remaining patient for now – they had a good week adding +7% . The main risk ahead being their AGM in November where they’ll provide FY20 guidance.

Broker Moves; We have a new property analyst at Shaw & Partners and she’s just initiated on Goodman (GMG) with a BUY. I’ll try and have a chat on camera with Peter O’Connor next week around resources.

  • GMG AU: Goodman Group Reinstated Buy at Shaw and Partners; PT A$15.25
  • OZL AU: OZ Minerals Downgraded to Hold at Morningstar
  • RBL AU: Redbubble Upgraded to Buy at Goldman; PT A$1.65

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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