Afternoon Report / A better day for Banks & Telco’s but Miners drag the broader market

By Nicholas Forsyth 20 April 17

A better day for Banks & Telco’s but Miners drag the broader market

Market Matters Afternoon Report 20th April 2017

The Telco stocks continued to cop a bid today with the likes of Telstra (TLS) up another +2.91% to close at $4.25, the target we wrote about the morning missive however it only got there very late in the session – a position we’ll re-asses tomorrow. Elsewhere, a good set of production numbers from Iluka, more on that below while RIO was a tad soft but expected in terms of their Q1 output.  Banks were better today overall as were miners in early trade however a continuance of a weak Iron Ore price saw some softness prevail later in the day…

Intra-Day Iron Ore Futures

A reasonable day for the market overall with some strength early on before a fairly mundane afternoon prevailed.  We had a range of +/- 25 points, a high of 5826, a low of 5801 and a close of 5821,  up +17pts or +0.3%.

ASX 200 Intra-Day Chart

ASX 200 Daily Chart

Iluka (ILU) was the standout with good production numbers but more about the outlook for the business and importantly cash flow and debt reduction from here. It now seems they are moving towards “firing” across all business units which has been missing in recent years. Iluka trimmed debt by ~$100m or 20% during 1Q and free cash flow for the March quarter was ~$80m for an annualised rate of ~$320m. The key now is if price for their underlying products which are used in paints and tiles can continue to advice while increased volumes come back on line.

Iluka (ILU) Daily Chart

Rio Tinto was also out with Q1 production numbers today, and they were soft but the market expected that. Their outlook was good and had the market enthused early on, but the falling Iron Ore price was too much of a drag and the stock finished down -0.39% to $58.67. We sent an alert to average into RIO under $58 and this remains a live call after we sold our small positon in Primary Healthcare (PRY) today.

Rio Tinto (RIO) Daily Chart

Elsewhere, it was interesting to see some strong buying in Henderson Group (HGG) today and move back up above $4.00. This has been a slow burner for us in recent times however it’s starting to find some form. It’s cheap, the Janus merger will put it on the radar of more global investors and it continues to have a large exposure to the UK (and the British Pound, which we like right now).

Henderson Group (HGG) Daily Chart

Have a great night,

The Market Matters Team

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All figures contained from sources believed to be accurate.  Market Matters does not make any representation of warranty as to the accuracy of the figures and disclaims any liability resulting from any inaccuracy.  Prices as at 20/04/2017.  5.00PM.
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