Anyone expecting a quiet session today was promptly proven wrong – with US futures copping some early selling which dragged out market down with it - any attempt to recover was sold in to resulting in a poor session. Banks were particularly weak, with 3 of the big 4 closing more than a percent lower to yesterdays close while CBA ‘outperformed’ with a loss of -0.97%. It was the materials and energy sectors that provided most support to the index today, with heavy weights BHP and RIO rising 1.94% and 1.32% respectively – a good effort in a soggy market. Our friend Alumina (AWC) opened higher but one again saw decent selling from the highs – closing down on the day – a disappointment.
Some kind words (or at least less negative ones) + a rating upgrade from UBS has helped the fortunes of GMA, one of the best performers today at a 3.9% gain, while Wisetech (WTC), which we discussed in Monday’s report, was the worst in the top 200, falling over 5%.
Overall, the market had a range of 39points, a high of 5864 and a low of 5829, slumping 38pts/-0.48% to 5829. A soft day today after such a strong performance from overseas markets overnight.
ASX 200 Chart
ASX 200 Chart
CATCHING OUR EYE
Broker Moves; analysts had a bit to say today:
* Freedom Foods initiated with a Buy at Citi; PT A$6.70 – the health food company jumped 8.7% on the report
*Genworth Australia Upgraded to Neutral at UBS; PT A$2.30 – more on GMA late
* Cooper Energy Rated initiated with Add at Morgans Financial; PT A$0.44 – jumping over 3% on the news
* BHP Upgraded to Buy at Deutsche Bank – more upgrades for BHP, outperforming Rio today with att 1.94% move higher
Genworth (GMA) $2.38 / 3.93%; The stock did ok today adding nearly 4% on the back of a ‘less negative’ note from UBS, who’s been negative the stock (and rightly so) over recent months. UBS now saying that they think GMA will launch a 75m share buyback at their annual meeting in May and could add $150m buyback in 2H to avoid capital build. They went on to say that recent declines in net earned premium have now been priced in, while the increase in short interest has made their sell call “less compelling”. The short interest in GMA is high – around ~17% so as we suggested in the income report today, the hint of more optimistic news – todays upgrade from sell to hold by UBS an example – will see the stock do well. They have their AGM on the 10th May which is the next catalyst for the stock.
Genworth (GMA) Chart
Have a great night
Harry and the Market Matters Team
Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday, or after the session when positions are traded.
James is a Portfolio Manager within Shaw and Partners heading up a team that manages direct equity and option portfolios. He is also the Primary Contributor to Market Matters, a daily investment report that offers real market insight.