Afternoon Report / ASX 200 slumps -1.4% in a roller-coaster week

By Market Matters 14 December 18

ASX 200 slumps -1.4% in a roller-coaster week

Market Matters Afternoon Report 14th December 2018


The market rounded out the week the same way it started with a soft day’s trade resigning the index to a poor week, down -1.4%. The banks & resources took a hit on trade fears as another Canadian national was detained in China. It appears the trade truce has only increased the market’s volatility as traders look to predict outcomes, and investors take risk off the table while awaiting the outcomes. Telcos continued their slide, and tech names also took a battering, while the relatively safer names of utilities and REITs held up in the face of the selling.

Overall, the index closed down -59 points or -1.05% today to 5602 and was down -1.4% on the week. Dow Futures are trading down -172 points / -0.70%.

ASX 200 Chart


ASX 200 Chart


Broker Moves; A couple of brokers took the risk on TPG today – upgrading ratings into the slump. As we said yesterday, the initial ACCC comments aren’t a death sentence, and we see the comments as overzealous.


·         TPG Telecom Upgraded to Hold at Morningstar

·         TPG Telecom Upgraded to Neutral at Goldman; Price Target A$7.20

·         Whitehaven Downgraded to Sell at Morningstar

·         Infigen Rated New Outperform at RBC; PT A$0.65

·         CYBG Upgraded to Market Perform at KBW; PT 2.30 Pounds

·         New Hope Upgraded to Outperform at Credit Suisse; PT A$4

·         Rio Tinto Downgraded to Neutral at Credit Suisse; PT A$79

Sectors this week;

Stocks this week;

Some of the specific events we covered during the week…

5 stocks adding weight to our bullish Christmas picture; On Thursday we looked at stocks that are showing bullish technical patterns which should run higher  into Christmas -  click here

Santa rally – has it started?  We also looked at a number of recent ‘ASX dogs’ that are starting to rally, some significantly so – click here

High yield = High risk,  IOOF (ASX:IFL) a case in point;  We’ve covered the woes of AMP a number of times in recent months (latest article here), however the more interesting case at the moment seems to be the woes facing IOOF (ASX: IFL), a stock that has traded from above $11 to close yesterday at $4.34. Is value starting to emerge? Click here

Telcos were in the spotlight this week thanks to ACCC concerns on pricing; In this note we discuss whether or not we should be concerned about the sector. Click here

Sonic Healthcare (ASX:SHL) this week struck a deal to buy US-based Aurora Diagnostics;  While we like Sonic we think there are better names in the healthcare space that can be bought on the cheap thanks to this market rout. Click here to see

QBE Insurance (ASX:QBE)  was hit during the weak, trading down to a 5 month low after the insurer issued an update that the market has taken as a convoluted profit warning; The update had an imbedded drop in FY19 earnings however the company ‘promised’ to do better in the future. While the backdrop for QBE is improving, another disappointment tests our resolve – click here

Yield Curve;  you’ll start to hear a lot about this; here’s what you need to know – click here

Sigma Healthcare (ASX: SIG) & Australian Pharmaceutical Industries (ASX: API) look to merge; the two pharmaceutical suppliers will look to roll into one. Click here


No changes the portfolios today.

Watch out for the weekend report. Have a great night,

James / Harry & 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.


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