Stocks rebound from early weakness

James Gerrish

Market Matters

After opening lower this morning , the market chopped around in a tight range till around 11am before finding its mojo and rallying strongly in the afternoon session to cap off a fairly volatile week for equities. As a sector level, the banks were again under pressure with ANZ leading the weakness as the cut to franking credits worked though the market….we had the CFO from ANZ in this morning however we maintain the view that ANZ will now underperform the others from here – of course, WBC reports on Monday which is the variable. Today we saw ANZ down -2.06%, CBA off by 0.53%, NAB off -0.70% while Westpac fell by -1.17%.

Overall, the ASX 200 closed up +5 or +0.09 % today to 6669, Dow Futures are trading up +56pts /+0.21%

ASX 200 Chart

ASX 200 Chart

CATCHING MY EYE;

Macquarie Bank (MQG) 0.34%; traded lower this morning before pegging much of the losses as the session rolled on as the bank announced first half number pre market. The numbers were mixed with growth of 11% vs the 1st half of 18 coming in slightly ahead of guidance of 10%. The result was a touch low on quality however with a falling tax rate bolstering the beat. Income was up 8% while expenses grew 9% but despite the 11% growth in the first half, Macquarie are still guiding to a slight decline in profit for the full year. The dividend also grew, up 16% to $2.50 a share at 40% franking. We like MQG into further weakness

Macquarie (MQG) Chart

Sectors this week:

Stocks this week:

BROKER MOVES;

· Adelaide Brighton Raised to Neutral at UBS; PT A$3

· Regis Resources Raised to Add at Morgans Financial Limited

· Regis Healthcare Cut to Neutral at JPMorgan; PT A$3.15

· Japara Cut to Underweight at JPMorgan; PT A$1

· Vocus Raised to Hold at Morningstar

· Iluka Cut to Hold at Morningstar

· REA Group Rated New Hold at Jefferies; PT A$107.78

· Seek Rated New Hold at Jefferies; PT A$24.52

· Carsales.com Rated New Buy at Jefferies; PT A$18.06

· Domain Holdings Rated New Hold at Jefferies; PT A$3.53

· ANZ Bank Rated New Underperform at Jefferies; PT A$23.60

· ANZ Bank Cut to Underperform at CLSA

· ANZ Bank Cut to Hold at Bell Potter; PT A$28

· Blackmores Cut to Underperform at Credit Suisse; PT A$69

· Scentre Group Raised to Overweight at JPMorgan; PT A$4.20

· Vicinity Centres Cut to Neutral at JPMorgan; PT A$2.80

· Avita Medical Raised to Speculative Buy at Bell Potter

· Caltex Australia Rated New Outperform at RBC; PT A$32

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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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