Note: Coverage of overnight markets will now be done as “Market Morning” before the Asian markets open. Trading Day will focus on the Asian session and Australian stocks.
After yesterdays walloping, the S&P/ASX 200 Index closed down just over 2 points to 4060 today, after absorbing another night of turbulence on risk markets.
As I suggested last week, the market appears on its way to 4000 points, oscillating in a trading range below resistance at 4350 points, the level at which a new rally must exceed to have any legs:
In after hours trading, the SPI futures are steady before the European open.
Other Asian equity market performed better with Japan’s Nikkei 225 up almost 0.5% to 8343 points, whilst the volatile Hang Seng also gained nearly 0.5% to 18155 points. The Shanghai Composite is currently slipping about 5 points or 0.25% below, trading at 2212 points. However, there is strong evidence that there maybe a strong bottom forming, with the bullish engulfing candle (where the lower open and higher close daily range eclipses the previous day range, including highs and lows) and strong intraday bidding yesterday with price gravitating around the 2200 mark:
The AUD actually put on nearly 0.5% today, still proving resilient, now at 99.52 cents, whilst WTI crude mimicked the commodity currecny, also up 0.5%, and is currently trading at $94.34USD a barrel.
Gold is trying to get back above $1600 USD an ounce and fell for most of the Hong Kong session but is slowly rising, now at $1595, but still remaining under its long term trendline, as seen in the chart below. In Australian dollars, the shiny metal effectively was stable at $1608AUD an ounce.
Movers and Shakers
A mixed day on the bourse, with some surprises and not so surprising moves, the best sectors being healthcare (I’ll explain why shortly) and telecomms, whilst consumer stocks were generally sold off. Billabong continued to get hammered today, falling nearly 13% and remaining below its IPO price, closing at $1.77 a share.
The banks were mainly down or steady, ANZ down 1.1%, falling from the top end of its trading range, Commonwealth (CBA) was steady , National Australia Bank (NAB) down nearly 1% with consistent selling looking like sending it back to around $22 a share, whilst Westpac (WBC) was also steady.
Macquarie (MQG) slipped slightly, having fallen considerably in the last few days as it came up against resistance (and sanity) at $25 per share. The big winner for the day was Cochlear (COH), after announcing the result of why their popular implant was failing (at less than 2% rate) the stock surged, finally finishing up over 16% above $64 a share, only $12 below its high before the recall and the European shenanigans:
Q Continuum will have details on what this announcement means tomorrow. Meanwhile, its “twin” CSL was bid up slightly, finishing at $32 a share even, the other market darling Telstra (TLS) almost gained back yesterdays falls, rising nearly 1% albeit on small volume.
To the resources, and it was mixed to continued frustration, as BHP Billiton (BHP) fell 0.58%, whilstits “twin” Rio Tinto (RIO) was steady for the day. Note in my post earlier today on the bulish broker forecasts, how far they are below their price targets. Is the market wrong and overselling the commodity story?
Gold miner Newcrest Mining (NCM) continues to fall, down another 3%, and now down to a 2.5 year low just above $30 a share. Remarkably amongst the volatility, as seen by the patterns on this chart below, it remains a great trading stock, but not so good for buy and hope:
Rounding out the ASX8, Fortescue (FMG) fell 1.4% continuing its reversal, whilst Woodside Petroleum (WPL) was bid up only 0.3% from depressed levels.
Defensive stocks Wesfarmers (WES) and Woolworths (WOW) diverged again, the former finishing flat, whilst the latter lost over 1%, possibly signalling the end of a short term uptrend as frightened retail investors sell everything in the sector.
Overnight futures are pointing to some modest gains on Euro and US markets, the latter proving more inspiring for now.
Disclosure: And yes, I am long Cochlear as the risk/reward tradeoff from the recall low was too huge to ignore.