Market edges higher, now approaching major resistance

James Gerrish

Market Matters

The market continued its march higher today with the index opening firm before rallying into a midday high. The typical Friday afternoon lethargy then took hold and the market drifted into the close. Asian market provided a positive backdrop with shares in Hong Kong up around 1% which fed into some buying of US Futures – they traded mostly higher during our time zone. Technology stocks the standout today thanks to a bumper update from Afterpay Touch (ASX:APT) – more on that below - and that seemed to feed through to the other tech names. Appen (ASX:APX) which resides in our Platinum portfolio was strong once it broke through $15, adding 4.98% on the session to close at $15.59.

Overall today, the index closed up +29points or +0.50% to 5879 and was up +1.82% for the week. Dow Futures are trading up +18 points / +0.34%.

All sectors closed higher today highlighting the broad based nature of the buying. Worth noting though, the market  is now approaching major resistance, around the 5950 / 6000 level.

ASX 200 Charts

 

CATCHING OUR EYE

Broker Moves; Citi took the knife to Sydney Airports today cutting it to a sell, mainly a result of concerns about a slowdown in international airline capacity and expectations of rising tax costs over next few years. The stock closed down -2.88% at $6.41, however they also release traffic numbers for December that provided another catalyst;

Elsewhere;

  • Sydney Airport Downgraded to Sell at Citi; PT A$6
  • Auckland Airport Downgraded to Neutral at Citi; PT NZ$7.71
  • Whitehaven Downgraded to Neutral at Macquarie; PT A$4.70
  • Platinum Asset Cut to Underperform at Macquarie; PT A$4.20
  • Viva Energy Group Rated New Equal-weight at Morgan Stanley
  • Adelaide Brighton Raised to Equal-weight at Morgan Stanley
  • Goodman Group Downgraded to Sell at Morningstar
  • Steadfast Downgraded to Neutral at Credit Suisse; PT A$3
  • AUB Group Downgraded to Neutral at Credit Suisse; PT A$13.45

Afterpay Touch (ASX: APT) $16.10 / + 12.98%; The best mover in the 200 today is Afterpay which closed up nearly 13% on the day. The alternative payments company has soared on an impressive business update which has seen sales grow 240% since the first half of FY18. Producing another record month in December 2018, driven in part by retail Christmas spend but also a number of new retailers coming onto the platform as well as continued customer growth. The update also noted that $260m of sales were generated in the US, Afterpay’s biggest focus of growth in the immediate future. 650,000 new customers were added in the States over the half.

Afterpay is set to face a Senate committee next week as regulators look to catch up on the loop holes these lending companies have utilized. Evidence here will be key to the long term growth of Afterpay locally, however the company seems to be on a huge overseas growth trajectory, reducing its reliance on the domestic market / and thus exposure to domestic regulatory changes.

Afterpay Touch (ASX: APT) Chart

Sectors this week; Tech the standout however the below highlights the ‘risk on’ call for the week, only negetive sector is the utilities…

Stocks this week; No love for SGR at the moment however it looks interesting ~$4

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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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