09 August 20
Market Matters Weekend Report – Sunday 9th August 2020
09 August 20
Market Matters Weekend Report – Sunday 9th August 2020
07 August 20
A quiet session to wrap up a positive week (700 HK)
07 August 20
How do the online classified stocks look as IT booms? (BHP, HVN, SEK, REA, CAR)
06 August 20
Materials carry the index (NCK, RMD)
06 August 20
3 stocks who enjoy a rising $A (NCM, JBH, HVN, WES)
05 August 20
ASX pings back towards the 6000 magnet – most stocks lower (CIP, COF)
05 August 20
Income Note: Digging deeper into 3 Income Stocks MM holds (WBCPG, SUL, WPL, TCL)
05 August 20
Overseas Wednesday – International Equities & Global Macro Portfolio (APT, GOOGL US, JHG US, WFC US, GOLD US, ETPMAG, VAE, ASIA)
04 August 20
ASX storms higher as RBA pledges further support (PNI)
04 August 20
Is this the final tourism washout? (QAN, WEB, FLT, CTD, SYD, SGR)
The ASX200 continues to be glued to the psychological 6000 area, on a couple of occasions we thought it was poised to breakout above 6200 but the magnetic pull proved just too strong. Under the hood the stock / sector rotation has also become fairly muted with no standout themes. Considering the banks, large cap miners and CSL all closed lower last week it was an ok performance by the ASX200 to close down only 10-points. We do feel the growth IT sector is slowly losing upside momentum however with over half of the sector closing positive last week its certainly not curtains yet. Last week saw OZ Minerals (OZL) rally almost 10% while Evolution (EVN) bucked the bullish gold influence falling over 4% after the companies update, happily this illustrates the market is still focused on corporate fundamentals.
Unfortunately, the standout news and topic of conversation has continued to be the coronavirus but the arrival of the local reporting season which fully kicks into gear in August might take investors back to basics. The day to day market sentiment is still likely to be dominated by the number of fresh virus cases announced every morning but on the stock level it’s going to be all about earnings and a company’s outlook, this will take more interpretation than usual as we all try and second guess the influence of COVID-19 moving forward. Next week sees Rio Tinto (RIO) on Wednesday and Fortescue (FMG) on Thursday face the music hence the resources are likely to be active, the question many will look to answer is have iron ore stocks become too optimistic?
While the Australian news is focusing on the number of new cases in Victoria and NSW it’s the numbers spiralling out of control in the US which still creates the most concern for MM. The calls are intensifying for the country to go back into lockdown as 60,000 new cases every day has become the norm – the very sobering big numbers are over 4 million cases with more than 140,000 deaths. These statistics continue to weigh on Donald Trump’s election chances in November, the bookmakers now have him as an almost “rank outsider” considering it’s a 2 horse race. We believe both a prolonged global economic slowdown due to the virus and worsening US-China tensions are largely built into stock prices but it’s hard to see further meaningful upside until the news improves.
MM is now neutral equities short-term.
Confirmed US cases of COVID-19 Chart
The local ASX200 has now been unchanged for a prolonged 7-weeks, we’ve been advocating “sell strength and buy weakness” since the start of June but I didn’t expect it would work so perfectly! Markets always return to their points of balance and on reflection the recent inactivity is simply offsetting the massive volatility around March time. Our preferred scenario is the local index will push higher in the coming months, where MM is likely to move slightly down the risk curve, but our inability to follow Europe and the US to fresh 5-month highs early last week has diminished slightly my bullish stance short-term.
MM remains Australian bullish stocks medium-term.
ASX200 Index Chart
As mentioned earlier both Europe and US indices made fresh 5-month highs early last week while our ASX failed to scale the same milestone reducing our confidence in stocks over the short-term but importantly we do believe both indices will make fresh all-time highs in the months ahead i.e. selling needs careful consideration / planning as many investors have already missed out on the last 20-30% upside, that’s painful if they also endured much of March’s pain.
MM remains medium-term bullish global stocks.
US S&P500 v German Dax Indices Chart
However, when we look at the US tech NASDAQ Index, which has regularly led equities over recent years, it closed well off its lows on Friday night - an excellent technical buy signal with the bull trend confirmed on a move only 1% higher. Hence the risk / reward actually favours buying next week for the short-term traders. As for investors like ourselves we have no interest in selling current weakness but fresh highs ~8% might prove to be a slightly different story.
US NASDAQ Index Chart
While equities and bonds have been fairly quiet through July its been a very different story in FX land, on Friday night the $US dollar broke down to levels not seen since October 2018 – as we keep saying at MM, we believe the tailwind of $US revenue for Australian companies over the last decade is rapidly swinging to a headwind – our initial target is the 80c area, or ~12% higher.
MM remains both bullish the $A and bearish the $US.
Australian Dollar ($A) Chart
Historically there’s a very pronounced inverse correlation between the $US and commodities i.e. if the Greenback falls commodity prices rally. The chart below illustrates this over the medium / long-term, it also shows us that there are many non-believers that the $US has experienced a major trend change, if we are correct commodities should be poised for a period of aggressive catch-up, the correlation with the $A implies they are ~10% under-priced.
The major reason the value of the $US influences commodities prices is simply the dollar is the benchmark pricing currency for most commodities i.e. the $US remains the reserve currency of the world. Hence when the value of the dollar drops, it costs more dollars to buy commodities. At the same time, it costs less in other currencies when the dollar is in decline. Hence to Australian stocks what matters the most is the combination of how any individual commodity is moving in $A terms plus if / where a business has hedged their respective exposure.
MM remains bullish commodities and resource stocks.
Bloomberg CRB Index Chart
The precious metal complex, and especially gold & silver, are 2 commodities MM has been regularly discussing of late as we look for an ideal risk / reward entry opportunity. When we consider gold in $A terms we can see it recently corrected ~10% but the appetite for the local gold sector, in the current “free money” environment, has been unrelenting and pullbacks have remained shallow. It feels like we will have to just bite the bullet and at least “pay up” for part of our planned exposure as gold looks set to continue its multi-year advance – our sector preference remains Newcrest Mining (NCM).
MM remains bullish precious metals.
Gold in $A/oz Chart
Evaluating 5 of last week’s big movers.
With the majority of markets going through a period of stagnation we felt the best way to add some value to subscribers in this Weekend Report was to briefly evaluate 5 of the advancers from last week to see if they are threatening significant changes in trend – we’ve deliberately focused on stocks we own / are considering buying as our P&L is obviously the primary concern.
1 NRW Holdings (NWH) $1.80
Last week mining services stock NWH rallied almost 10%, theres no real change from our comments last week except to add we felt it was a very solid performance to only give back a few cents on Friday as the market tumbled 70-points – NRW is generally a high beta stock. MM is holding in our Growth portfolio, there was no obvious news to attract last week’s buying, its recent ~25% decline probably just brought the value investors out of their burrows as the resources related business looks very cheap to MM, especially if we’re correct and a reflationary cycle is around the corner.
MM remains bullish NWH initially looking for ~30% upside.
NRW Holdings (NWH) Chart
2 Tabcorp (TAH) $3.64
Last week gambling stock TAH rallied 9% after the businesses announced plans for a new CEO. We like TAH for a push towards $4 but the risk / reward is not compelling at current levels especially as the growing ethical fund players will be giving the stock a wide berth.
MM likes TAH initially targeting a test of $4.
Tabcorp (TAH) Chart
3 QBE Insurance (QBE) $10.40
Last week serial underperformer QBE rallied 11% as the board updated forecasts for FY20. At MM we are not a fan of the stock and we feel it just made up a little lost ground after being a huge laggard after the company’s announcement wasn’t too bad.
MM is neutral QBE.
QBE Insurance (QBE) Chart
4 OZ Minerals (OZL) $13.78
Last week OZL surged over 9%, a pleasing move for MM as we own the stock in our Growth Portfolio. The rally and company performance are coming as no surprise to ourselves and we’re actually enjoying reading a few brokers saying it’s a sell at current levels. A period of consolidation would not surprise us but overall, we remain very bullish the stock and sector, hence we see no reason to disembark the train at this stage.
MM remains bullish OZL and the Resources Sector.
OZ Minerals (OZL) Chart
5 AP Eagers (APE) $7.23
Last week auto retailer APE rallied almost 17% after a bullish research note from influential broker UBS who have a price target of $8. We agree with UBS and believe last week’s strength is likely to follow through with an initial test of $8 likely but to appreciate further general retail conditions are probably needed to improve i.e. a vaccine or successful containment of COVID-19 in NSW and Victoria.
MM is bullish APE with an initial target of over 10% upside.
AP Eagers (APE) Chart
We remain bullish NWH and OZL both of which reside in our Growth Portfolio.
Also TAH and APE look poised to rally at least 10% with the later our preference, conversely we have no interest in QBE.
Our positions as of Friday. All past activity can also be viewed on the website through this link.
Weekend Chart Pack
The weekend report includes a vast number of charts covering both domestic and international markets, including stock, indices, interest rates, currencies, sectors and more. This is the engine room of our weekend analysis. We encourage subscribers to utilise this resource which is available by clicking below.
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. All prices stated are based on the last close price at the time of writing unless otherwise noted. Market Matters does not make any representation of warranty as to the accuracy of the figures or prices and disclaims any liability resulting from any inaccuracy.
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 Market Matters 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, 25th October 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.
Where we refer you to a third party financial services provider, we may receive a referral payment. This referral payment may be a percentage of the fee’s charged by the financial services provider between 0% and 25%, or a fixed amount. These referral payments are made by the financial services provider to Market Matters and are not an additional cost to you.
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.