The Monday Report – 12 August 2019

Daily Market Reports | Aug 12 2019

By Greg Peel

Shuffling the Deck

After a wild week of mostly market-wide panic selling followed by bargain hunting across selected sectors, Friday's trade on the ASX was one of repositioning. A modest gain was made up of shuffling around in sectors.

A flow was evident from the big miners into the banks, although falls in iron ore stocks were less pronounced than another big fall in the iron ore price might have earlier suggested. The materials sector nonetheless closed up 0.5%, boosted by a well-received earnings result from James Hardie ((JHX)) which drove that stock up 14% to top the ASX200 winners table, as well as big moves up for heavily-shorted lithium miners after offshore peer Albemarle posted a positive report. Orocobre jumped 10.3%.

The banks were also helped by an 11.6% gain for AMP ((AMP)) after the company announced it had successfully completed its capital raising. Clearly there was some doubt, and supposedly now AMP has the wherewithal to re-right the ship.

Energy (+0.4%) managed to stabilise after a rough week and should be supported today after a bounce in oil prices on Friday night.

Positions were trimmed in utilities, healthcare and the consumer sectors with industrials and telcos favoured, while IT rose 1.3%.

The top five ASX200 losers on the day included three gold miners as profits were taken after a stellar week.

The RBA governor told a parliamentary committee on Friday that a zero cash rate remained a possibility but on examination the board had decided QE was not really suited to Australia. Deutsche Bank economists became the first to forecast a cash rate at 0.25%.

We head into the new week with sentiment remaining on edge, balancing global risks in trade, Hong Kong and Brexit with the knowledge the Fed and friends will be there to provide a safety net. Wall Street closed lower on Friday but only after some very late Friday squaring.

Our futures were down -22 points on Saturday but this week we begin to head into the guts of the local reporting season. It will be a battle of the micro and macro as reports are assessed on an alpha basis while worldwide volatility will drive the macro.

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