Afternoon Report / Market plunges into the end of the month

By Market Matters 31 July 20

Market plunges into the end of the month

Market Matters Afternoon Report 31st July 2020

WHAT MATTERED TODAY

**Technical difficulties this afternoon – no charts available today. We apologise for the inconvenience**

A soft start got worse as the session rolled on as the market fell to a 3-week low in its worst session since June. Initial weakness came on the back of a particularly poor GDP print in the US overnight which saw the economy contract -32.9% and the selling accelerated as the day went on before a slight reprieve at the close. Selling was broad with only a few select pockets of green amidst the sea of red in equities. Risk assets took a hit as bond yields fell and investors took flight to defensive assets. All sectors closed in the red but the consumer discretionary and real estate names were spared from the worst of it. The discretionary sector is expected to have a reasonable reporting period with a range of stimulus measure helping consumer spending combined with the demand for working from home necessities and niceties. Financials and energy the worst sectors for selling falling -2.75% and -3.08% respectively.

Super Retail Group (SUL) which we hold in the Income portfolio was a standout today, jumping 9.49% after pre-releasing full year results. The final figures will come in late August but today they announced strong sales growth in Super Cheap, Rebel and BCF brands helped life-for-like sales for the group rise 3.6% in the year. The group expected NPAT of $153-154m, slightly higher than FY19.

The next best performer for the index was NRW Holdings (NWH) which we hold in the Platinum portfolio – up +7.94% today after coming out of a trading halt this morning, announcing it had been named as a partner in the preferred proponent for the Bunbury Outer Ring Road project in WA. NRW has a 40% stake within the group and the project has been costed at $852m on 3 and half years of construction.

AMP was the weakest of the lot, falling -12.8% after disappointing the market with pre-released first half numbers. The group is expected to announce 10% falls in earnings for Australian Wealth Management and AMP Capital segments, and AMP Bank to see earnings fall nearly 30%. First half earnings is expected at $140-150m, well below market expectations.

The selling on the final day of the month means the ASX200 managed to add just 30pts in July – and all of this gain was seen in the last half an hour as the index clawed back some points into the close.

Overall, the ASX 200 closed down -123pts or -2.04% to 5927.

OUR CALLS

No changes today

Have a great night

Harry and 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, or after the session when positions are traded.

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