The Match Out: Market rallies, Hamish sells MFG stock, Rate hike tomorrow

James Gerrish

Market Matters

A bullish but quiet session to kick off the week with the market opening sharply higher but losing some direction as the day progressed, no trade in the US tonight (closed for 4th July) the reason however locally, we’re now approaching full-year reporting so companies are in blackout and therefore news is thin on the ground.

  • The ASX 200 finished up +72pts/ +0.1.11% at 6612
  • The Energy sector was best on ground (+2.62%) while REITs (+2.12%) & Consumer Discretionary (+1.79%) were also strong.
  • Utilities (+0.37%) and Materials (+0.44%) underperformed but still finished higher.
  • The RBA is set to increase rates tomorrow, probably by 0.50% with the market currently pricing in a 40bps increase, i.e. a few thinking 25bps is more likely.
  • There are some calling the possibility for 0.65% which we see as highly unlikely, although it is consistent with the market's pricing of rates by year-end.
  • Austal (ASX: ASB) +5.78% rallied again on a broker upgrade from Macquarie, this comes on the back of a contract win last week. MQG putting a $2.65 PT on ASB.
  • Oz Minerals (ASX: OZL) +1.74% also upgraded today to a buy-equivalent from JP Morgan, OZL is our most recent portfolio addition.
  • Magellan (ASX: MFG) -9.92% whacked again after Hamish Douglass sold ~$10m of stock having previously said that he had no intention to sell, he still owns (with his wife) 21.5m shares.
  • Breville (ASX: BRG) +5.07% was up after completing the acquisition of Italian-based prosumer coffee group LELIT
  • Galileo Mining (ASX: GAL) was in a trading halt pending a capital raise, IGO is a major shareholder along with well-known prospector Mark Creasy who owns 25%.
  • Tyro (ASX: TYR) +4.13% is apparently getting some private equity interest, or at least investment bankers are shopping it about. Mike Cannon-Brookes via Grokco owns 13.7% of the payments company while Fidelity owns 6%.
  • Iron Ore was down in Asia today.
  • Gold was flat ~US$1811 at our close.
  • Asian stocks were mixed Hong Kong was down -0.45%, Japan +1.28% while China was up +0.32%
  • US Futures are all lower, down ~0.30% however no trading in the cash market tonight.

ASX 200 Chart

Magellan (MFG) $11.71

MFG -9.92%: another blow for the fund manager today with one-time star ex-CIO Hamish Douglass reducing his holding in the firm. The $9.7m sale comes 3 months ahead of his return to Magellan where he will take on a consultancy role to keep him at arm’s length from the board, company, and clients, but close enough to lean on when required. No reason was given for the sell down but it does concern the market when such a large shareholder with strong investment nuance takes money off the table. Compounding the issue was the retirement of the long-standing head of sales and distribution Frank Casarotti after more than 15 years with the company.

Broker Moves

  • Austal Raised to Outperform at Macquarie; PT A$2.65
  • Newcrest Cut to Neutral at JPMorgan; PT A$23
  • OZ Minerals Raised to Overweight at JPMorgan; PT A$21
  • Tyro Payments Cut to Market-Weight at Wilsons
  • Resimac Group Cut to Market-Weight at Wilsons; PT A$1.18
  • Platinum Asset Raised to Neutral at Credit Suisse; PT A$1.80
  • Aston Minerals Rated New Speculative Buy at Red Cloud

Major Movers Today

Have a great night,

The Market Matters Team.

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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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