The Match Out: Markets in a holding pattern ahead of US CPI tonight

James Gerrish

Market Matters

US inflation data will be an important release tonight and that will have a big bearing on where markets go from here. That uncertainty was obvious in the local market today with the index trading in a tight range, before popping higher into the close. The Energy and Resource stocks hit hard, particularly in early trade before some recovered while the retailers and IT stocks did well.

  • The ASX 200 finished up +15pts/ +0.23% at 6621
  • The consumer discretionary stocks were best on ground (+1.18%) while IT (+1.18%) & Communications (+1.18%) made up a tightly run race on the leader board.
  • Energy (-1.78%) and Utilities (-1.78%) the weakest links.
  • US Inflation data out tonight in the US – consensus sitting at +8.8% YoY. As one trader said on Bloomberg today, the market is short into this data-point, if it’s not too bad, stocks will pop – we agree.
  • Across the ditch, the RBNZ raised rates by another 50bps, taking their benchmark to 2.5%.
  • We made a number of changes to portfolios today, generally increasing our exposure to resources into prevailing weakness – an international alert out shortly.
  • Goldmans went the other way and have downgraded their commodity price assumptions and outlook on the sector – Oz Minerals (OZL) cut to neutral but $20.50 price target v this mornings open of $15.93…We have gone the other way buying OZL today.
  • KMD Brands (KMD) +0.50% which is better known as Katmandu delivered a decent trading update this morning on the back of a strong winter period.
  • Qantas (QAN) +4.25% rallied following a good update from American Airlines overnight + Boeing also talked to strong demand for their planes.
  • ANZ -1.19% was the big underperformer amongst the banks, confirming they are in talks to buy MYOB from private equity giant KKR. Buying from private equity is seen as a bad move while ANZ thinking outside the box has also got the market offside.
  • After falling 38% yesterday, Sezzle (SZL) fell another 15% today as concerns circle around their funding – it seems clear they’ll need to raise capital.
  • Gold was trading ~US$1725 at our close close.
  • Asian stocks were mixed, Hong Kong down -0.31%, Japan +0.61% while China was off -0.14%
  • US Futures are all up, the Nasdaq the best of them +0.53%.

ASX 200 Chart

Broker Moves

  • Evolution Raised to Buy at Canaccord; PT A$2.70
  • Champion Iron Raised to Buy at Goldman; PT A$7.30
  • OZ Minerals Cut to Neutral at Goldman; PT A$20.50
  • Gold Road Raised to Buy at Argonaut Securities; PT A$1.41

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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