Resources remain in vogue at the expense of the banks

James Gerrish

Market Matters

A bullish open for the local market this morning as traders pushed stocks sharply higher into an early top just below 6400, however that was the best of it as sellers emerged from the woodwork – the mkt closing about 35points from the early highs. However, the composition of the move was interesting, banks were on the nose with sustained selling throughout the session as money flowed into the resource sector – Fortescue Metals (FMG) up another ~6% to stand out while both RIO and BHP were strong, adding more than 2% a piece.

Overall today, the ASX 200 added +37pts or +0.59% to 6365. Dow Futures are trading down -75points / -0.29%

ASX 200 Chart

ASX 200 Chart

CATCHING OUR EYE:

ANZ -3.04%: shares hit after New Zealand's central bank revoked the ability of the bank's local subsidiary to autonomously assess its risk capital requirements due to "persistent weakness" in its processes. It seems continuous issues with how the bank calculates its risk capital has propelled the regulator to act. Increasing capital requirements have been muted in NZ + now the regulator is regulating with more vigour – that’s ultimately a negative story for ANZ and the rest of the banks generally. We saw some decent sell flow on the banks today through our desk and the selling grew throughout the day as this ANZ news broke. ANZ the hardest hit down -3.04% while CBA fared best down by -0.68% to close at $72.83.

ANZ Bank (ANZ) Chart

BHP +2.45% - we added to the MM Platinum Portfolio on open this morning and the stocks continued to be well bid throughout the day. It seemed money coming out of the banks was finding aa natural home in the miners – although FMG remained the standout. We remain bullish BHP targeting a quick assault on the ~$40 region again.

BHP Chart

Sectors this week; Materials clearly in focus this week with some big moves, while financials were weak although a large portion was dividend related.

Stocks this week; FMG up on special dividend + buoyant Iron Ore price, NRW won a good new contract while Lend Lease (LLC) is getting taken over (apparently!)

Broker Moves;

· Mayne Pharma Downgraded to Neutral at Citi; PT A$0.60

· Dexus Upgraded to Buy at Citi; PT A$14.10

· Auckland Airport Upgraded to Buy at Citi; PT NZ$9.40

· GWA Group Downgraded to Sell at Deutsche Bank; PT Set to A$2.85

· St Barbara Downgraded to Underperform at Macquarie; PT A$2.70

· APN Industria REIT Raised to Hold at Moelis & Company; PT A$2.75

· Harvey Norman Upgraded to Hold at Morningstar

· Amcor Downgraded to Sell at Morningstar

· Xero Downgraded to Underweight at JPMorgan; PT A$53

· Brickworks Upgraded to Hold at CCZ Statton333

Never miss an update

Stay up to date with the latest news from Market Matters by hitting the 'follow' button below and you'll be notified every time I post a wire.

Market Matters publishes daily market reports and sends SMS alerts when we transact on our portfolio. To get our latest market views and hear when we take new positions, trial Market Matters for 14 days at no cost by clicking here.


1 topic

2 stocks mentioned

James Gerrish
Portfolio Manager
Market Matters

James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment