A very negative day really in terms of price action (not so much aggregate move) with the index up strongly early to make a new 5 year high before sellers dominated from 11.30am onwards following stronger than expected employment numbers. The unemployment rate was inline (5.4%) however participation was very strong at 65.5%....shows some strength in the underlying labour mkt and that saw the market sold off while money flowed into the Aussie Dollar which was up from 76.13c to 76.76c on the news. We also saw some tightening in short term interest rates in China however the labour stats the main game in town today.
Aussie Dollar Daily Chart
The Energy sector was again the standout courtesy of buying in the Coal space while again, we’re writing about the underperformance of the interest rate sensitive utilities. An overall range today of +/- 32 points, a high of 6043, a low of 6011 and a close of 6011, off -10pts or -0.17%
ASX 200 Intra-Day Chart – The mkt clearly didn’t like the thought of higher interest rates!
ASX 200 Daily Chart
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1.Myer (MYR) 65.5c / -9.66% Poor old Myer, and poor old Sol for that matter with another downgrade today and the stock hit by another 9.66% to close on a new low of 65.5cps. Hard to be anything but negative on this name however clearly the risk being short here is whether or not SL will step up and have a crack.
The key line for me was…
Myer Daily Chart
2 .Caltex (CTX) $34.77 / 3.73%rallied as high as $35.26, however drifted into the afternoon following ACCC’s rejection of BP’s $1.8b bid for Woolworth’s petrol business. Back in August 2017, the ACCC flagged preliminary concerns so this news should not be that surprising! The concern was that BP already has <1400 sites across Australia and an additional 530 sites (with 12 in development) would increase BP’s share of the wholesale fuel market from 18% to >30% (roughly where Caltex’s share is) and would therefore substantially lessen competition (i.e. motorists would pay more for petrol). For similar reasons Caltex also failed in its $300m bid for 300 of Mobil’s fuel sites back in 2009.
Caltex Monthly Chart
3. Independence Group (IGO) $4.28 /6.47% – we own IGO, and their move today was a strong one adding more than 6%. We like this Nickel / Gold play and are targeting a re-test of recent highs above $4.50.
Independence Group (IGO) Daily Chart
Have a great night
James & the Market Matters Team
Prices as at 14/12/17
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.