Capio Capital Market Overview and Trade Ideas Asian markets are taking the lead from Wall Street and are trading notably higher this morning. The ASX is currently up +1.7% with gains in financials, mining, industrials and IT, BHP Billiton and Rio Tinto are up +1.7% and +1.3% respectively. The Nikkei is up +2% with the rally being supported by weaker Yen. Japanese exports in September rose by the fastest pace in 7 months but the trade deficit still grew more than estimated. US markets closed sharply higher after recent selloff as a result of European stimulus and better than expected corporate earnings results. The Dow gained +1.3%, the Nasdaq jumped +2.4% and the S&P500 advanced by +2%. Existing home sales in September bounced back from a negative reading in August and rose +2.4%. Apple reported a +13% increase in 3Q profit, Coca-Cola cut their long-term revenue target and fell on the day. After close Yahoo release results which topped analyst estimates. Boeing, Dow Chemical and Tupperware are companies due to report results today. The major European markets rallied as the European Central Bank engaged in QE and corporate earnings surprised to the upside. The Cac rallied +2.2%, the Dax gained +1.8% and the FTSE added +1.6%. For the 2nd straight day, the ECB bought Italian covered bonds and rumours were that the QE programme could be extended to corporate bonds. News of 3rd quarter Chinese GDP data dispelled global growth woes and spurred the markets higher. In company news, Reckitt Benckiser fell after missing analyst estimates, Daimler gained on M&A news where they looks to acquire an Italian motorcycle manufacturer and Commerzbank soared +4.7% along other banks in the region. The Top40 (+2.1%) opened in the red but quickly turned and climbed higher as the day progressed. We followed global markets higher on the back of better than expected Chinese GDP data. Industrials (+2.5%) led the market particularly retailers, healthcare and Telco’s. Financials gained +2% with insures outperforming the banks. Resources added +1.1% with higher commodity prices being offset by the stronger rand. All eyes will be on the new Governor of the reserve bank Nhlanhla Nene as he presents his mid-term budget speech later today. The value traded was R19.2 billion and the rand was hovering around 10.99 to the US dollar at the close. Trading Ideas 1) Long NPN from R1250. Tencent is up 3% in Hong Kong, and with Naspers forming a inverse head and shoulders pattern, this stock has a target of R1330. 2) Long SOL from R567, with the oil price stabilizing and the Rand weaker against the USD, we believe there is upside in this stock at least to resistance at R600. 3) Long OML from R31.60. Stock found support at R29.50 and has broken out of a inverse head and shoulders pattern. We believe this stock will retest recent highs.
Posted on: Wed, 22 Oct 2014 07:00:35 +0000
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