Daily Report

The market once again found resistance at the top of the range today despite the positive lead from the US market overnight. This sideways chop continues to dominate the flow at the index however we are starting to see some of the bigger picture trends deviate from recent history. US 10 year bond yields ticked up through 1.90% overnight and that has prompted some selling amongst those yield play stocks today including Dexus (DXS) and Woolworths (WOW) which were down -2.30% & -1.34% respectively, while the gold stocks were also in the firing line today, Saracen (SAR) the worst of the majors falling by –8.33%

Asian markets were mostly lower today while US Futures were trading down during out time zone

Another hectic week passes by on the desk – markets always throwing up curve balls and this week it was a surprise capital raise by Westpac (WBC) on Monday, the placement done at $25.32 with the stock closing the week at $27.42, however worth remember that WBC trades ex-dividend for 80cps on Tuesday with the new shares not being entitled to it – still, not a bad effort all things considered. NAB on the other hand delivered a ‘relatively’ strong result outperforming its peers for during the period.

The resource stocks came back into the fray this week with a strong performance by most of the heavyweights. Fortescue (FMG) traded to a new high at $9.61 before settling at $9.56 today. BHP and RIO were also strong as were the Copper stocks. I had a chat with Peter O’Connor on Monday about opportunities in the sector – click here to view if you missed it.

Overall, the ASX 200 closed down -2pts or -0.04% today to 6724, Dow Futures are trading lower by -58pts/-0.21%

ASX 200 Chart

ASX 200 Chart

CATCHING MY EYE;

Sectors this week: the market was up less than 1% this week but there was a clear rotation into the ‘risk on’ sectors – tech, energy doing well while utilities and real estate were left behind

Stocks this week:

BROKER MOVES; Brokers are cautious on Flight Centre post their AGM comments yesterday. They will have a lot of work to do in the second half to make up the guidance, and growth in lower margin transactions isn’t helping.

· Flight Centre Cut to Neutral at Citi; PT A$42.90

· Flight Centre Rated New Hold at Jefferies; PT A$37

· Flight Centre Raised to Hold at Morningstar

· Perenti Global Cut to Hold at Argonaut Securities; PT A$2.20

· Zip Co. Raised to Buy at UBS; PT A$4.80

· Downer EDI Cut to Neutral at UBS; PT A$8.15

· Mercury NZ Raised to Neutral at Forsyth Barr; PT NZD4.53

· Genesis Energy Raised to Outperform at Forsyth Barr; PT NZD3.23

· Meridian Energy Raised to Neutral at Forsyth Barr; PT NZD4.11

· TrustPower Cut to Neutral at Forsyth Barr; PT NZD7.75

· Contact Energy Raised to Outperform at Forsyth Barr; PT NZD8.03

· Whitehaven Rated New Buy at Jefferies; PT A$3.90

· New Century Rated New Outperform at RBC; PT A$1.20

· NAB Rated New Underperform at Jefferies; PT A$26.40

· Viva Energy Group Rated New Neutral at Goldman; PT A$2.20

· James Hardie GDRs Raised to Buy at BofAML; PT A$29

· Rio Tinto Rated New Equal-Weight at Morgan Stanley; PT A$95

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Michael Whelan

Disproportionate whack to the gold stocks may be in anticipation of Super Pit sale-required capital raisings, if recent news the past month is anything to go by.