The Match Out: ASX flat, can’t break resistance, Energy bounces back

James Gerrish

Market Matters

It was a fairly lacklustre start to the week, the ASX chopping around par for most of the session as sellers seemed intent on defending the 7,475 resistance level we’ve written about in our last few notes. SPI Futures were pricing a breakout to the upside today, but alas, that didn’t prove to be the case as weakness among the IT and Healthcare sectors weighed on the broader market, only the energy stocks making any decent headway.

  • The ASX 200 finished down -4pts/-0.06% today at 7452.
  • Energy was strong, the sector up +1.95%, while IT was the biggest drag falling -1.72%.
  • Gold stocks had a good session and so did the re-opening / travel stocks, Flight Centre (ASX: FLT) +5.71%, Webjet (ASX: WEB) +4.76% and Qantas (ASX: QAN) +4.09% the standouts.
  • Crown Resorts (ASX: CWN) -3.29% fell on reports that Blackstone has no interest in launching a bid in the short term – The Australian saying we shouldn’t expect anything for at least 18 months.
  • PolyNovo (ASX: PNV) -9.69% down hard after the burns treatment company said Friday that its managing director Paul Brennan is stepping down. “Increasing differences with the board in relation to Paul’s interaction with the company’s senior management team and his management style” were to blame.
  • Sydney Airport (ASX: SYD) +2.79% has accepted the offer of $8.75 per share from a group led by IFM Investors and unanimously recommended shareholders vote to approve the deal early next year.
  • Xero (ASX: XRO) -4.86% fell on a broker downgrade – Jeffries downgrading to hold with $150.08 PT.
  • Gold held onto gains in Asia today, closing at around $US1,819 – we like the gold sector here.
  • January Iron Ore Futures were flat in Asia.
  • Asian markets were mixed, Nikkei -0.27%, Hong Kong -0.37% while China was up +0.36%.
  • US Futures are flat.

ASX 200

Australian Super – Asset Allocation

It’s always interesting to see how the large super funds are positioned in terms of asset allocation over time. The below table looks at the current asset allocation of the country’s biggest – Australian Super - and the slight tweaks it makes month to month. From September to October, the fund increased its weighting of infrastructure and global stocks. It’s worth highlighting its very low exposure to fixed interest, given inflationary expectations.

Australian Super – Asset Allocation (Source: Bloomberg)

Broker moves

  • Pendal Group Cut to Neutral at Credit Suisse; PT A$7.20
  • Orica Cut to Neutral at Credit Suisse; PT A$17.23

Major movers today

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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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