Afternoon Report / Gold a standout, Property joins in as house prices rise 6.2% for the year (NST)

By Market Matters 15 September 20

Gold a standout, Property joins in as house prices rise 6.2% for the year (NST)

Market Matters Afternoon Report 15th September 2020

WHAT MATTERED TODAY

A fairly lacklustre session today with the market oscillating in a +/-35pt trading range before closing down a few ticks. A bounce back in some of the technology stocks one obvious trend however the biggest influence from an index perspective was weakness across the banks, the big 4 taking 14points from the index. Gold also strong ahead of a number of central bank meetings this week, a theme Harry covers below while it was the property sector than really shone thanks to decent / less bad housing numbers.

Asian markets were mostly higher today, ditto for US Futures which did okay during our time zone.

By the close, the ASX 200 was down -4pts / -0.08% to 5894. Dow Futures are trading up +123pts

ASX 200 Chart

ASX 200 Chart

CATHCING MY EYE

Gold Stocks: buying returned to the gold names today after they had, for the most part, tracked lower over recent weeks. Silver Lake (SLR) was the best of the large caps adding more than 8%, but some of the more speculative names enjoyed larger moves. The buying comes despite a strong Aussie dollar which continues to see support, trading near 12 month highs – given gold prints in USD, a strong AUD weighs on earnings for local producers. Gold is back in the spotlight though as a number of central banks around the world meet this week – Bank of Japan, Bank of England and most importantly the US Fed will all make calls while the RBA printed the minutes from their meeting 2 weeks ago. The view remains that central banks have been given almost free reign to drive inflation higher – rates will remain at or near 0 over the medium term while a number of other measures are being deployed in an attempt to kickstart inflation. Gold enjoys negative real rates (when inflation runs above bond yields) and with the near-term news flow expected to be positive for the commodity, equities benefitted. We own a small position in Newcrest (NCM) in the Growth portfolio, with plans to add to it.

Northern Star (NST) Chart

House Prices: Data out today showed that house prices fell in all capital cities apart from Canberra in the June quarter, however looking at the year on year stats below they show prices actually rose 6.2% through the year to the June quarter with prices higher in all capital cities except Perth and Darwin. Obviously, Job Keeper / mortgage holidays are having an influence here however looking at the data below, it’s not that concerning at this stage, although we’ll more clarity around the real state of housing in the months ahead.

Source: Bloomberg

BROKER MOVES

·         Credit Corp Cut to Neutral at Macquarie; PT A$18.50

·         BHP Raised to Buy at Goldmans; PT A$40.10 **They increased their Iron Ore Forecasts** as an aside Macquarie are No 1 on BHP and have a Outperform (Buy) and $44.00 PT

·         Harvey Norman Raised to Outperform at Credit Suisse; PT A$5.01

·         Wesfarmers Raised to Outperform at Credit Suisse; PT A$51.59 – first analyst above $50 I can see for WES (Jefferies at $50 even)

OUR CALLS

No changes to the portfolios today.

Major Movers Today

Have a great night

James / Harry & the Market Matters Team

Disclosure

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