Morning Report / RBA helps market to 6 month high (WHC, WZR)

By Market Matters 15 October 20

RBA helps market to 6 month high (WHC, WZR)

Market Matters Afternoon Report 15th October 2020

WHAT MATTERED TODAY

Buyeres returned today, brushing a softer US market to take the ASX to another 6 month high. The RBA was the main support for equities today, flagging plans to buy longer dated bonds. Banks were back in favour as a result, but it was the resources that stood out today. Money was cycled out of the tech names and into the resources – a trade we flagged in the AM report that we would be keen to join in on, though not pulling the trigger just yet.

Aussie employment data was out today with Melbourne’s extreme lockdown seeing the unemployment rise to 6.9% - this was better than expected though with all other states posting increases in jobs for September. China CPI & PPI also flashed on the screens today – inflation was a weak +1.8% while PPI was down 2.1%, not a long way from expectations and markets were largely unmoved as a result.

By the close, the ASX 200 rose by 31pts / +0.50% to close at 6210. Dow Futures are trading down -77pts/-0.27%

ASX 200 Chart

ASX 200 Chart

CATHCING MY EYE

Whitehaven Coal (WHC) +11.58%: shot higher today with the September quarter production coming in at the top end of the guidance range. We have flagged Whitehaven a couple of times lately with the stock under pressure on reports China has stopped taking imports of Australian Coal. BHP confirmed that some clients Chinese were looking to defer taking orders of their coal – it looks as though the import limits had been met for the year and not anything more sinister. In any case, the shorts had picked up on WHC into the quarterly, and they were burnt today.

Whitehaven Coal (WHC) Chart

Wisr (WZR) +10.81%: stellar 1Q21 for the small cap lender today. Shares have been sliding since the result – at the time the company didn’t provide an update to how the loan book was tracking into the new year. Today, the fears were put to bed, with nearly a 50% increase on originations to start he year vs the July quarter. A small cap we like, a beneficiary from the move away from big 4 lenders and of stimulus.

Wisr (WZR) Chart

BROKER MOVES

·         Bank of Queensland Raised to Add at Morgans Financial Limited

·         Propel Funeral Partners Raised to Buy at Moelis & Company

·         Bank of Queensland Cut to Underperform at Macquarie; PT A$6

·         Warrego Energy Rated New Outperform at RBC

·         CSL Cut to Sell at Morningstar

·         Incitec Raised to Buy at Jefferies; PT A$2.35

·         Northern Star Raised to Neutral at JPMorgan; PT A$13.90

·         Bank of Queensland Raised to Outperform at Credit Suisse

·         Challenger Raised to Buy at Bell Potter; PT A$4.70

OUR CALLS

No changes today

Major Movers Today

Have a great night

Harry & 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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