The market opened reasonably well this morning considering the soft leads overseas plus net negative news flow out over the weekend – a drop of 40pts early felt optimistic and that proved correct as stocks were sold down hard throughout the day, led lower by weakness across Asia along with US Futures which opened lower and stayed that way through our time zone.
Banks have been relative ‘outperformers’ in recent times however today they copped one on the chin, the big four accounting for 37 points of the ASX 200’s decline – ANZ the worst down -4.16% while NAB was the best of a bad bunch down ‘just’ 2.54%. CSL was also weak down ~4% and that took another 11 points from the index. There were very few places to hide today with Gold the only obvious exception, Regis Resources (ASX: RRL) the standout adding +5.21% while Newcrest (ASX:NCM) put on +1.57%.
Overall, the ASX 200 closed down -129 points or -2.27% to 5552. Dow Futures are currently trading down -194 points or -0.79%.
ASX 200 Chart
ASX 200 Chart
Catching our eye
Broker Moves; Brokers moved on the embattled IOOF (ASX: IFL) today – according to the analysts neither of the O’s in the name stands for Opportunity… yet. The analysts took the cautious route, with a number of downgrades factoring the risk of the ANZ deal falling over among other potential issues. Today it was announced both the Chairman and the CEO would be stepping down immediately as a result of APRA’s pursuit of the executive team announced on Friday, although the company plans to fight the allegations. The stock took another tumble today, falling -6.96% to $4.28, taking the losses in 2018 to -60%.
IOOF Holdings (ASX: IFL) Chart
- IOOF Holdings Downgraded to Neutral at Citi; PT A$4.50
- IOOF Holdings Downgraded to Neutral at Macquarie; PT A$5.10
- IOOF Holdings Cut to Equal-weight at Morgan Stanley; PT A$5
- IOOF Holdings Downgraded to Neutral at Credit Suisse; PT A$4.60
- Meridian Energy Cut to Underperform at Forsyth Barr; PT NZ$3.09
- Mercury NZ Downgraded to Neutral at Forsyth Barr; PT NZ$3.56
- AMP Upgraded to Buy at Morningstar
- Charter Hall Downgraded to Sell at Morningstar
- Newcrest Reinstated at BMO With Market Perform; PT A$23
- Event Hospitality Rated New Overweight at JPMorgan; PT A$15.41
Telcos; The telcos were mixed today following the 5G spectrum auction which was held over the weekend. Much has been made of the new network availability that will see mobile speeds rival that of the NBN. The auction saw Telstra (ASX: TLS) buy the most of any competitor, spending $386m across 143 of the 350 available ‘lots.’ Somewhat of a surprise was Vodafone & TPG (ASX: TPM) teaming up to buy 131 lots ahead of the merger, spending a total of $263m. This highlights the desire of the combined group to become a major player in the Australian telecommunications market, gaining almost 3x the amount of spectrum to rival Optus. Still though, Telstra remains the top telco in the country, and the new 5G network will give it yet another chance to stay at the helm. We own Telstra in the Platinum Portfolio – it fell -1.3% today to $3.04.
Telstra (ASX: TLS) Chart
Want to receive daily market updates?
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.