The Monday Report

Daily Market Reports | Jul 08 2019

By Greg Peel

No Lead Required

Another day, another 30 point gain for the ASX200, as it continues its seemingly relentless push towards the old high. With rate cuts in the bag, and tax cuts in the bag, the TINA trade continues to underpin, and even a day off on Wall Street made no difference.

Notably, the local VIX volatility index is just over 10, which is a clear signal of complacency.

Investors continued to take profits in the big miners on Friday, sending materials down -0.9%. News out of China is that relevant state ministries are highly concerned about the sharp rise in the price of iron ore. They are subsequently investigating, and have threatened to “severely” crack down on any irregular behaviour.

The only other sector to close in the red were utilities (-0.4%), but would not have done so if toll roads and airports were in the right sector.

APRA confirmed on Friday that the prior “at least 7%” mortgage serviceability rate will be abandoned for a 2.5% above prevailing rate requirement. Not exactly new news, but the banks (+0.6) had a positive session.

Confirmed tax cuts also proved beneficial for the consumer sectors, while healthcare (+1.4%) just keeps revelling in those coughs and sneezes.

Leading the individual ASX200 names on Friday was EclipX Group ((ECX)), up 20% on the announcement the company had sold its troubled Graysonline business. The stock has now recovered around three-quarters of what it lost in March.

News from the advertising industry that outdoor revenues increased another 5.2% in the June quarter following a 5.9% increase in March had oOh!media ((OML)) up 9%.

On the other side of the ledger, SpeedCast International ((SDA)) can’t find a bottom, falling another -4.8%, and Fortescue Metals ((FMG)) took the silver with a -4.3% fall.

The rally on Friday came despite the potential for Wall Street volatility on Friday night on the release of the June jobs report. Suffice to say the futures were down -12 points on Saturday morning.

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