Market drifts lower - yield stocks weigh (TWE)

James Gerrish

The market rolled over early this morning on some big volume through the futures market before ebbing and flowing throughout the session. A whimper up into the close but nothing to write home about, the market simply feels a little hot now and needs to some time to cool – sort of like property markets as discussed this morning but (hopefully) in a shorter time frame. Yield stocks came under pressure today – expected really given the rise in US interest rates overnight with the 10 years cracking above 3.11%. A trend we think will continue!

Overall, not a lot on the docket today with the market finishing down -12pts or -0.21% to close at 6094.

ASX 200 Chart

ASX 200 Chart

CATCHING OUR EYE

Broker Moves; ANZ is fast becoming the bank of choice after they reported well + showed a sector leading capital position. If you hold banks income, ANZ seems the prime candidate for better returns in the coming 12 months, although the share price has now moved in line with that view as discussed in the Income Report yesterday.

Brokers reasonably active…

  • ANZ Bank (ANZ AU): Upgraded to Outperform at Credit Suisse; PT A$30
  • Automotive Holdings (AHG AU): Upgraded to Buy at Morningstar
  • Bapcor (BAP AU): Downgraded to Hold at Morningstar
  • Crown Resorts (CWN AU): Cut to Neutral at JPMorgan; Price Target A$13.50
  • Doray (DRM AU): Upgraded to Buy at Argonaut Securities; PT A$0.41
  • IOOF Holdings (IFL AU): Downgraded to Hold at Morningstar
  • Macquarie Atlas (MQA AU): Cut to Equal-weight at Morgan Stanley; PT A$6.36
  • NAB (NAB AU): Downgraded to Neutral at Credit Suisse; PT A$29
  • Sydney Airport (SYD AU): Cut to Equal- weight at Morgan Stanley; PT A$7.27

Treasury Wine Estates (TWE) $16.90 / -6.22%; soft today following some news flow this morning regarding inventory levels in China. China has been one of the biggest growth areas in wine globally, and TWE has targeted this market successfully – one of the many factors that underpinned the share price rally in recent times - shares went from sub $5 in 2015 to over $20 recently. A glut of supply suggests that wine is being imported faster that it can be drunk and imports will have to slow down, or stock sold at a discount. Although Treasury discredited this view in an announcement before the market opened, they did note that exports to China have been delayed by customs, which is not expected to be a long-term issue.

Treasury Wine Estate (TWE) Chart

Have a great night, from James & the Market Matters Team

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Disclaimer


James Gerrish

James is a Portfolio Manager within Shaw and Partners heading up a team that manages direct equity and option portfolios. He is also the Primary Contributor to Market Matters, a daily investment report that offers real market insight.

Expertise

ASX:ANZ ASX:NAB ASX:SYD ASX:TWE

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