The Match Out: Market slides as growth disappoints

James Gerrish

Market Matters

A risk-off session today particularly on the close with some big sell-orders hitting the tape knocking the ASX 200 ~30 points in the match, tearing up what was a solid fightback from midday lows – the intra-day chart below highlighting the move well. It seems the ‘worm might have turned’ in relation to short-term sentiment, big market on close (MOC) orders are indicative of that so we’re now taking a more cautious stance, looking to reduce some market exposure after a solid run by local stocks.

  • The ASX 200 finished down -61pts/ -0.85% at 7291
  • The Material sector was best on ground (+0.22%) and the only sector to rise while Healthcare (-0.74%) outperformed a weak market – but not by much.
  • IT (-3.29%) and Energy (-2.02%) the weakest links with the Oil price now down ~40% from recent highs.
  • Lead Portfolio Manager James Gerrish was on Ausbiz this morning talking about our portfolio positioning with specific reference to Energy following Crude Oils correction – Watch Here
  • We held a webinar at midday today with Analysts Jono Higgins & James Bisinella – thanks to all those who attended, plenty of interest in the topic - 5 growth stocks that won’t die wondering. Subscribers will be sent a recording of the webinar tomorrow.
  • Australian GDP missed expectations today, up 0.6% in the September quarter from the previous three months and climbed 5.9% over the past year – below 6.3% expected.
  • The front end of Australia’s yield curve inverted for the first time in 21 months - the cash rate at 3.10% while the three-year yield is at 3.07% implying weaker growth ahead.
  • We talked about Copper in a Webinar last week with Resource Analyst Peter O’Connor – Watch Here – today Goldman’s painted a more positive near-term picture for Copper saying prices will rocket to record levels in the next 12 months as a looming supply shortage coincides with growing demand.
  • Rocky was more subdued in the near term outlook for Copper, although remains a medium term bull.
  • Iron Ore remained well supported in Asia today, with Fortescue (ASX: FMG) up +2.27% as a result.
  • Coal prices continue to recover, January Futures out of Newcastle back up above $US400/tonne (they were sub $US300).
  • Gold edged higher to ~US$1773 at our close.
  • Asian stocks were mixed Hong Kong up +1.21%, Japan -0.54% while China was up +0.26%
  • US Futures are all up, around +0.20%

ASX 200 Chart

ASX 200 Chart – Weekly Chart

Broker Moves

  • GUD Holdings Raised to Buy at Citi; PT A$10
  • IPH Rated New Neutral at JPMorgan; PT A$8.70
  • Adbri Rated New Underweight at Barrenjoey; PT A$1.60
  • Dicker Data Rated New Neutral at Barrenjoey; PT A$11.50
  • Beach Energy Cut to Neutral at JPMorgan; PT A$1.90

Major Movers Today

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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