Afternoon Report / Stocks up but close well below session highs – Sydney house prices on a tear (WBC, NWH)

By Market Matters 02 December 19

Stocks up but close well below session highs – Sydney house prices on a tear (WBC, NWH)

WHAT MATTERED TODAY

It seemed like the positive data around Sydney property spurred on buying this morning, with the major banks seeing some love after a torrid period of late. The AFR running with the headline of Sydney posting the strongest growth in 31 years + is on track to recoup the recent 15% decline by as early as March 2020. CoreLogic data saying that Sydney added +2.7% in November while Melbourne added +2.2%. Elsewhere, Hobart added +2.3%, Canberra +1.6%, Brisbane +0.8% and Adelaide +0.5% - these are clearly strong numbers that should make the RBA question whether or not further cuts are appropriate – more insight on this at tomorrows interest rate decision (no cut expected).  

On the flipside of that argument, building approvals were weak, down 8.1% MoM and 23.6% YoY, both weaker than expectations data showed at 11.30am this morning.

Local Economic Data today

In China, the weekends stronger than expected official manufacturing data was baked up by the Caixin figures today which printed 51.8 v 51.5 expected and a tickle above last months read of +51.7 – all bodes well pre-trade deal.

Chinese manufacturing data

At a sector level today, most were in the green implying broad-based buying of todays strength, Gold, Energy &Telcos the only laggards, although we did see sellers emerge right at the end the  day to push the market well off session highs. Overseas, Asian markets were strong, Japan up more than 1% the best of the region while Hong Kong stocks added +0.5%

Overall, the ASX 200 gained +16pts /0.24% today to close at 6862. Dow Futures are trading high by 81pts/0.29%

ASX 200 Chart – Early strength, late selling as a big line of selling hit the market near the close.

ASX 200 Chart

CATCHING OUR EYE

Westpac Share Purchase Plan (SPP) pricing: The WBC SPP closes today and the pricing will be set at a 2% discount to the volume weighted average price (VWAP) during the pricing period. .

VWAP is $24.71 therefore the SPP pricing will likely be set at  $24.21 (subject to WBC calculations & rounding). There is a facility available until the 6th December to withdraw from the SPP.

Westpac (WBC) Chart

Seasonals: Not a lot of specific stock news across the ticker today, however as we enter December we’re now hearing a lot about the Santa Claus rally that will push the ASX 200 above the 7000 mark. Statistically, this will likely happen given December is a typically strong month for equities. We’ll pen a note shortly on the seasonal characteristics of this time of year – normally a time for cheer in the mkts…

NRW Holdings (NWH) +3.02%: Up again today and now comfortably trading above the $3 handle. We’ve covered this a few times recently however it’s a stock we own that’s doing good things. UBS upgraded + put out a bullish note on the recent acquisition of BGC Contracting. UBS predict 13% earnings per share growth for a company trading on 12x,. They upgraded their target price from $3.20 to $3.85 – we’re happy holders

NRW Holdings (NWH) Chart

Broker moves;

  • Nine Entertainment Cut to Hold at Morningstar
  • AGL Energy Raised to Overweight at JPMorgan; PT A$24.10
  • Infigen Cut to Neutral at JPMorgan; PT 70 Australian cents
  • Origin Energy Raised to Overweight at JPMorgan; PT A$9.50
  • Beach Energy Raised to Overweight at JPMorgan; PT A$2.60
  • Growthpoint Rated New Neutral at Credit Suisse; PT A$4.13
  • Northern Star Raised to Overweight at JPMorgan; PT A$11.50

OUR CALLS

No changes to the portfolios today.

Major Movers Today

Have a great night

James, 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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