Afternoon Report / Iron Ore rocks the market – Fortescue tanks

By Market Matters 13 April 17

Iron Ore rocks the market – Fortescue tanks

Market Matters Afternoon Report 13th April 2017

**No Weekend Report due to Easter – back on Tuesday Morning the 18th. Have a break**

Equities have grinded higher throughout April and all was running to script until Iron Ore fell -8% overnight and Fortescue picked a poor day to deliver a weak set of production numbers which prompted profit taking across the market – but particularly in the material stocks. More on FMG below, however in terms of the index, we opened lower and there was very little appetite to buy ahead of the Easter break and we drifted sideways for the season. We had a range today of +/- 37 points, a high of 5918, a low of 5881 and a close of 5890,  off -44pts or -0.74%.

ASX 200 Intra-Day Chart

ASX 200 Daily Chart – a drop below 5900 now puts us in a more cautious frame of mind after a good run of late

Fortescue picked an average day to release an average set of production numbers and not even Nev Power and his PR team could sugar coat it – the stock closed down -6.78% to $5.50 after announcing;

-       Production volumes and shipments were good at 39.6mt however cash costs of $13.06 per ton was higher that the ~$12.50 expected. Realised price was also lower at 66/t  vs ~$70/t expected which is not great, but is aligned with what they generally get when Iron Ore prices are weak given they have lower quality Ore

-       They also lowered June QTR guidance in terms of price from 85-90% and now expect 75-85% of benchmark.

-       The stock was down -6.78% however we think they’ll be earnings revisions down by 10-15%

-       The have $1.5bn in cash and are guiding to full year shipment of 165mt to 170mt

We talked recently about buying FMG into weakness however given our exposure in BHP and RIO + the Easter break, we thought it best to revisit next week

Fortescue (FMG) Daily Chart

We took a nice +18% profit in Evolution today on the back of a nice pop in the stock. We continued to view GOLD as a trading vehicle and we’ll take those gains when they’re on offer!!

Evolution (EVN) Daily Chart

Have a great night,

The Market Matters Team

Disclosure

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.

Disclaimer

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 13/04/2017.  5.00PM.

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.

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.

To unsubscribe. Click Here