18 September 19
Gold & IT stocks best on ground, Energy stocks weigh (CNI, CMA, QAN)
18 September 19
Gold & IT stocks best on ground, Energy stocks weigh (CNI, CMA, QAN)
18 September 19
Income Report: Stepping up and fading the recent move in bond yields – includes portfolio buy-sell alerts (SKI, TCL, FLT, WHC, EHE)
18 September 19
Overseas Wednesday – International Equities & ETF Portfolios (GDX US, NCM, BABA US, TTD US, PSH NA, BAC US, RY CN)
17 September 19
RBA still banging the lower for longer call on rates
17 September 19
Bond yields firm, oil surges should we “run” from growth to cyclicals? (RHC, NCM, BSL, WPL)
16 September 19
Crude spikes, Bellamy’s bid while Sims scraps guidance (BAL, SGM, BHP)
16 September 19
Subscribers questions (BHP, OZL, IIND, MSB, MGG, NCM, ASL, AWC, WSA, HLS)
15 September 19
Market Matters Weekend Report Sunday 15th September 2019
13 September 19
Tech continues to struggle
13 September 19
Does the Healthcare sector look poised to repeat 2018? (CSL, COH, RMD, ANN, PME)
“Hump Day” was fascinating this week as we saw the ASX200 slip 21-points while under the hood the volatility was really eye catching as sector rotation accelerated like a pumped up Ferrari, we saw the Financials & Telco’s rally ~+1% & +1.6% while the Healthcare & Resources fell -1.5% and -1.9% respectively. However on the stock level the rotation was even more pronounced as we saw the iron ore stocks get smacked with Fortescue (FMG) leading the way tumbling -8.3% while boring old Telstra (TLS) rallied +2.1% making fresh 6-month highs.
Its been a long time since we saw the “Big 3” RIO, BHP and FMG fall on average over 5% in just one day but the firm banking sector again managed to limit the overall markets loss. The markets are fascinating at present, with a number of questions being asked including are the banks holding up because of looming rate cuts which may lead to a recovery in the Australian housing market? Are investors starting to embrace the MM view that the $A has found a floor which creates a headwind for resources and healthcare stocks but makes our overall index attractive to O/S Investors moving forward? For every answer a new question appears to surface but happily with the increased volatility on the stock level comes increased opportunity.
For the record MM believes the answer to the above 2 questions is yes in both cases with the banks also enjoying a major tailwind of anticipated rate cuts making their dividends very attractive while the pressure on margins / earnings not appearing to come under scrutiny at present. Also with the “Big 3” resources the iron ore price is the tune leading the share price dance.
Our short-term outlook for the ASX200 is unchanged, we continue to feel the market is positioning itself for a begrudging pullback towards 6100 and potentially 6000 with the recent 7-weeks consolidation around the psychological 6200 area fitting our mildly negative picture, a close below 6220 is now required technically for us to feel on the money.
The ASX200 has achieved our upside target area switching us back to a neutral / bearish stance short-term.
Overnight the US indices again closed mixed with the S&P500 lower but the tech based NASDAQ higher, the main standout was the Healthcare sector which fell almost 3%. The SPI futures are calling the ASX200 to open marginally higher.
As we head into the break we thought this morning was an opportune time for us to reassess 3 of the most influential sectors in the ASX200 before the long Easter break.
**There will be no Weekend Report on Easter Sunday, reports resuming Tuesday morning**
We mentioned Telstra (TLS) earlier following its strong day rallying to fresh 6-month highs, MM remains bullish targeting the $3.50 area, or 4% higher. At this stage we are pondering by what degree to reduce our large exposure to TLS if / when our target area is reached. This is a position that has attracted a few tough questions / comments throughout the months in our Monday Question reports but so far its illustrating perfectly that investing is about both the business quality and the price you pay for it.
MM remains bullish TLS with an initial target ~$3.50.
Telstra (TLS) Chart
Situation risk is something all investors live with week to week and its why prudent investing incorporates a spread of risk – having all your eggs in one basket when a left field event occurs can be a financially very painful experience.
Yesterday we woke up to see Italian soccer giants Juventus had lost in the Champions League to young upstarts Ajax from Holland, a result that was not in the script for Ronaldo et al. The stock was hammered closing down 18% as the revenue loss from the early exit from soccer’s major club competition was calculated – the E100m “punt” by the Italians when they bought Ronaldo is now looking questionable, a bit like a poorly executed takeover.
Juventus Football Club (JUVE IM) Chart
Are we at an inflection point for 3 large Australian sectors.
Today we have taken a look at 3 of the major sectors within the ASX200 as rotation is dominating the market i.e. money is being switched between both stocks and sectors as opposed to leaving / entering the overall market, this is illustrated by the ASX200 bouncing around the 6200 region for ~8-weeks.
1 Australian Healthcare sector
I have started off with the healthcare sector as we have been fairly vocal around the sector in 2018/9. Since the GFC the ASX200 has doubled while the Healthcare sector has more than quadrupled but the story has been very different since August last year when we have seen the popular sector fall ~10% while the index has slipped less than 2%, before we include dividends. The market has rerated the sector on a price / valuation basis with the question is there further to go.
The major stocks in the sector like CSL, Cochlear (COH) and ResMed (RMD) are world class businesses but what price should we pay, especially as we still believe the market is overweight these outperformers – it’s a similar story to Telstra earlier but in reverse. In this case we like these businesses but MM feels there is a very good chance of buying them cheaper.
Over the last decade the sector has enjoyed the strong tailwind of a weak $A and falling interest rates but we feel these multi-year trends are slowly coming to a conclusion – remember stocks generally turn at least 6-months before the underlying fundamental changes.
MM remains cautious at best towards the healthcare sector at current levels and will maintain an underweight position at most.
ASX200 v ASX200 Healthcare sector Chart
When we look at the Healthcare sector long-term a further 15% pullback would not surprise, in the bigger picture its hardly a dent in the extremely impressive advance which primarily kicked into gear ~2011.
From a risk / reward perspective we like the Healthcare sector as one over 10% lower.
ASX200 Healthcare Index Chart
2 Australian Materials / Resources sector
The Australian resources sector has enjoyed a bumper few years but we should not lose sight that along the way the sector has pulled back 11% and 15% warning us that chasing the current new highs is a dangerous game. Much of the surge in 2019 is due to the Vale disaster in Brazil which sent the price of iron ore up over 50% but history tells us that this type of event has often created tops in markets – in the last 2-days Fortescue (FMG) has dropped over 10% showing the volatility in the sector.
Undoubtedly the “Big 3” have now become impressive cash cows and their capital management programs has clearly put them into the corner of high yielding stocks but with the underlying risk of commodity prices moving forward.
MM likes the resources stocks into weakness where the risk / reward becomes more attractive..
ASX200 v ASX200 Materials / Resources sector Chart
When we take a glance at the Materials sector as an index its only 3.7% below its multi-year high following a very impressive rally, the sector “feels” like it’s in the relatively early stages of at least a mild pullback.
Technically we like the sector ~2.5% lower with stops another 5% lower, good risk / reward.
ASX200 Materials Sector Chart
3 Australian Banking sector
MM is concerned that the markets focusing on the yield of the banks and not their earnings risk moving forward but we are still currently comfortable with our equal holdings in CBA, NAB and Westpac. If we consider the extreme case of NAB, its yielding 7.8% fully franked while 3-year bond yields are at their lowest level in history, its hard to argue with the “wriggle room” for dividends to be trimmed and still remain extremely attractive from an income / yield perspective.
Also from a long-term perspective the banks have been falling for 4-years so valuations are clearly becoming more attractive it’s a play off between efficiency improvements as branches are closed / headcounts reduced and underlying margin contraction in today’s tough low interest rate environment.
MM is considering adding some regional banks to our Platinum Portfolio for reasons discussed in previous reports.
ASX200 v ASX200 Banking sector Index Chart
We often talk about the elastic band being too strethed and when we look below its not hard to see why healthcare stocks have encountered some selling and banks a little buying. Likewise the value gap between resources and banks has continued to stretch in 2019 but it doesn’t feel as pronounced to us just yet but we would not be surprised to see some “hot money” leave the resources sector as looked the case yesterday.
ASX200 Banking / Healthcare & Materials Sectors Chart
Of the 3 sectors we saw today at current levels we are not keen on Healthcare, like Resources a few % lower and are comfortable with our bank holding from a yield perspective.
US stocks were again very quiet last night as Easter approaches. Medium-term we still think the NASDAQ has another ~5% upside medium-term but a pullback feels overdue – importantly our 8000 target for the NASDAQ is only a good week or two away in today’s market!
With both the S&P500 and tech based NASDAQ recently reaching fresh 2019 highs we have turned mildly neutral / negative US stocks.
US Russell 2000 Chart
No change with European indices, we remain cautious as we enter the “sell in May and go away” period for European stocks.
German DAX Chart
Overnight Market Matters Wrap
· The US market closed little changed overnight with strong earnings from the likes of Morgan Stanley and PepsiCo offset by weaker IBM earnings number and continuing weakness in healthcare stocks, which fell 2.9% on fears of increased regulatory hurdles. Tech stock Qualcomm also rallied another 12%, following yesterday’s 23% jump, after settling a regulatory dispute with Apple.
· In this early stage of the US reporting season, with only a handful of companies reported, 84% are ahead of analyst estimates.
· Commodities were also mixed despite stronger than expected growth numbers from China as well as continued signs of buoyant US growth. Yesterday China reported GDP of 6.4% pa in the first quarter, while industrial production in particular was well ahead of expectations at 8.5% pa.
· BHP is expected to outperform the broader market, after ending its US session up an equivalent of 0.29% from Australia’s previous close.
· The June SPI Futures is indicating the ASX 200 to open 10 points higher, towards the 6270 level this morning.
Have a great day!
James & 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.
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 18/04/2019
Reports and other documents published on this website and email (‘Reports’) are authored by Market Matters and the reports represent the views of Market Matters. The MarketMatters Report is based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal, advice. That means they are prepared for multiple distributions without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor. Market Matters or its author(s) accepts no responsibility for any losses or damages resulting from decisions made from or because of information within this publication. Investing and trading in financial products are always risky, so you should do your own research before buying or selling a financial product.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports. Market Matters may publish content sourced from external content providers.
If you rely on a Report, you do so at your own risk. Past performance is not an indication of future performance. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Financial Services Guide
Date prepared: Wednesday, 22 November 2017
Last update: Friday, 23rd April 2019
About this Financial Services Guide (FSG)
This FSG provides you with key information about a range of subscription services offered by:
Marketmatters Pty Ltd (Market Matters) Australian Financial Services Licence No. 488798 ABN (20 137 462 536)
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
T: 1300 301 868
E: [email protected]
In this FSG, “we”, us” and “our” refer to Market Matters.
Market Matters holds Australian Financial Services Licence No. 488798 (AFSL) and is responsible for any financial services that we provide to you.
This AFSL was issued on 8th September 2016.
The purpose of this FSG is to provide you with information about:
Market Matters operates a website, www.marketmatters.com.au (Website), where customers may, for the payment of a subscription fee, access certain financial information and general advice. In particular, the Website provides:
This FSG relates only to the Website Services.
What financial services we can offer in connection with the Website Services
As holder of AFSL number 488798, in connection with the Website Services we are authorised to provide general financial product advice to both retail and wholesale clients in relation to the following financial products:
The Website Services are comprised of general advice only. That is, none of the advice given on the Website or by provision of the Website Services takes into account any of your objectives, financial situation or needs (Your Personal Circumstances). Before acting on any of the information, advice or Website Services, you must consider the appropriateness of this information in light of Your Personal Circumstances and, if necessary, consult a financial adviser before making any investment decision.
If you are seeking to acquire a specific financial product or security, you should obtain a copy of and consider the Product Disclosure Statement or Prospectus for that product before making any investment decision.
The Website does not provide a trading platform or access to a trading platform. There is no ability to purchase or sell financial products through the Website.
How do I access these services?
You can access these services by going to www.marketmatters.com.au and following the prompts and steps required to sign up for membership. Please read all terms and conditions carefully.
Fees and benefits payable to us and our associates
The Website is a subscription-based service. A yearly fixed subscription fee is payable to Market Matters when you subscribe to the Website which will vary depending on the type of subscription for which you subscribe. At the date of this FSG, the yearly subscription fees are as follows:
Platinum: $1,238 for 12 months
Platinum: $1,993 for 24 months
Subscription fees vary from time to time and are provided on the Website.
The Website does not currently feature third party advertising. Market Matters reserve the right to advertise at a future time for which they may receive remuneration. Any such advertising will be independent of any other content on the Website.
All representatives of Market Matters (Market Matters Staff) receive a salary paid by Market Matters. Market Matters Staff may also receive performance-based bonuses which are based on profitability, the number of subscribers and subscription renewal rates.
How do we manage potential conflicts of interest?
Market Matters have implemented policies and procedures to mitigate the risk of conflicts of interest. These include:
Market Matters Staff and Contributors are encouraged to express independent views and opinions on the topics they write about. This is established through ongoing training, external audits and our conflict of interest and staff trading policies. Market Matters Staff are required to serve the best interests of the subscribers, without consideration of any commercial or personal interests.
How is my personal information dealt with?
If you have a complaint about our services, you should take the following steps:
Contact us and discuss the complaint directly. If you do not feel comfortable discussing the complaint with us or your complaint is not satisfactorily resolved within 2 business days, please telephone Market Matters, on 1300 301 868 and ask to speak with the Complaints Officer. We suggest you put your complaint in writing at this time so that the issues are fully documented and understood by the parties. Your complaint should be addressed to:
The Complaints Officer
Level 29, Chifley Tower,
2 Chifley Square Sydney NSW 2000
Market Matters will review your complaint within 45 days and attempt resolution. If you are still not satisfied with the outcome, you may take your complaint to an external dispute resolution scheme. Market Matters is a member of the scheme operated by the Financial Ombudsman Service. You should write to:Australian Financial Complaints Authority Limited (AFCA)
You may also wish to consult ASIC in relation to your complaint. ASIC’s website contains information on complaining about companies and people and describes the types of complaints handled by ASIC. You can contact ASIC on its free call infoline:
Tel: 1300 300 630 or email [email protected]
We maintain professional indemnity insurance to cover our employees and Authorised Representatives (including us) for the financial services they provide, having regard to the following:
If you require further information about these compensation arrangements please contact us.
Terms and Conditions
This website, www.marketmatters.com.au, is published by Marketmatters Pty Limited (ABN 20 137 462 536) ('Market Matters', 'MM', 'us', 'we', 'our') Australian Financial Services Licence 488798
Financial Services Guide
Market Matters Financial Services Guide (FSG) is located here, and contains important information about the financial services provided by Market Matters. You must read our FSG and consider it in the context of your Personal Circumstances before acting on any advice. By accepting the terms and conditions you are acknowledging that you have read the FSG.
Provision of the Reports
Reports and other documents published on the Market Matter’s website (‘Reports’) are authored by Market Matters. The Reports represent the views of Market Matters based on technical analysis of companies, commodities and the market in general. Technical analysis focuses on interpreting charts and other data to determine what the market sentiment about a particular financial product is, or will be. Unlike fundamental analysis, it does not involve a detailed review of the company’s financial position.
The Reports contain general, as opposed to personal advice. That means they are prepared for multiple distribution without consideration of your investment objectives, financial situation and needs (‘Personal Circumstances’). Accordingly, any advice given is not a recommendation that a particular course of action is suitable for you and the advice is therefore not to be acted on as investment advice. You must assess whether or not any advice is appropriate for your Personal Circumstances before making any investment decisions. You can either make this assessment yourself, or if you require a personal recommendation, you can seek the assistance of a financial advisor.
The Reports are published by Market Matters in good faith based on the facts known to it at the time of their preparation and do not purport to contain all relevant information with respect to the financial products to which they relate. Although the Reports are based on information obtained from sources believed to be reliable, Market Matters does not make any representation or warranty that they are accurate, complete or up to date and Market Matters accepts no obligation to correct or update the information or opinions in the Reports.
If you rely on a Report, you do so at your own risk. Any projections are estimates only and may not be realised in the future. Except to the extent that liability under any law cannot be excluded, Market Matters disclaims liability for all loss or damage arising as a result of any opinion, advice, recommendation, representation or information expressly or impliedly published in or in relation to this report notwithstanding any error or omission including negligence.
Past performance is not a reliable indicator of future results. Brokerage costs have not been included in the calculation of performance. As financial products rise and fall in value, returns may be negative. Performance figures are not intended to be a forecast. Market Matters does not guarantee the performance of or returns on any investment.
Employees and/or associates of Market Matters may hold one or more of the stocks reviewed on this website.
Subscriptions and Subscription Prices
To access premium content available on the Market Matters website you may initially subscribe through the complimentary trial which provides you full access to all services for the trial period. You are limited to two trials after which you must subscribe to one or more membership categories available on the website or direct with Market Matters before you can trial the service again, three months after the expiry of your second trial.
To subscribe to Market Matters services and access to the website you may go to the Memberships page of the website, provide the information marked as ‘Mandatory’ and select the payment option for the price quoted (at the time of your transaction) or contact the team directly at Market Matters by phone or email. You will then receive a verification email from Market Matters indicating that your subscription and payment have been accepted and you will be able to access the premium content.
Prices published on the Market Matters website are quoted in Australian Dollars (AUD) and are inclusive of GST and/or all other duties and taxes. Market Matters has used reasonable endeavours to ensure that prices for subscription to its services are published accurately on the website but these prices are subject to change and Market Matters reserves the right to change these prices and will notify you of any increase by email (with the price increase to apply from the time the next payment is due).
Marketmatters Pty Ltd (ABN 20 137 462 536) will issue a tax invoice to paying subscribers in relation to any supply that is subject to GST in accordance with A New Tax System (Goods and Services Tax) Act 1999.
Any member is entitled to cancel their membership at any time. In the event a member does wish to cancel their subscription, cancellations must be notified in writing to:
Level 29, Chifley Tower, 2 Chifley Square, Sydney NSW 2000
or by email to: [email protected]
All cancellations of month-by-month subscriptions will be cancelled and not billed again the following month.
All cancellations within 14 days we be entitled to a full refund. Any introductory gifts, such as, but not limited to; iPads, Fitbit watches, Apple watches, Google Homes, must be returned in their original condition before a refund will be made.
All cancellations made after 14 days of subscription commencement will not be entitled to a refund unless in the event of extenuating circumstances, at the sole discretion of Market Matters.
Subscriptions will automatically renew on the expiry date of current subscription. In these instances the subscription will be renewed at the current rate published on the Market Matters web site, using the same credit card that paid for the initial subscription, unless otherwise requested by the subscriber. A subscriber who wishes to cancel after being renewed in this way will have a “14 day cooling off period” in which they can request to discontinue and will receive a full refund for the renewal payment, this can be done in writing to:
Level 29, Chifley Tower, 2 Chifley Square Sydney 2000
or by email to: [email protected]
Market Matters has not reviewed any of the websites which link to this website or to which this website links. Market Matters is not responsible for the content of any other website or pages linked to or linking to its website. Following links to any other websites or pages shall be at the user’s own risk.
Copyright © 2018 Marketmatters Pty Ltd (ABN 20 137 462 536). No part of this website, or its content, may be reproduced in any form without the prior consent of Market Matters.
This Agreement is governed by and is to be construed in accordance with the laws of New South Wales, Australia. You agree to the non-exclusive jurisdiction of the courts of New South Wales, Australia in respect of any proceedings concerning this Agreement. This website is not available to US and/or EU persons and by accepting these terms you confirm that you are not a US and/or EU person.