Capio Capital Market Overview and Trade Ideas Markets are trading mixed this morning as instability in Iraq weighed on sentiment ahead of economic data from China. Lower iron ore prices continued to hurt miners with basic resource counters the laggard on the ASX (Rio -2.2%, BHP -1.3%). Higher oil prices also hurting airline counters. Bank of Japan maintained its policy with the Nikkei up +0.28%. Sinopec led the gains on the Hang Seng with Lenovo a top performer after Intel raised their annual outlook. US stocks continued lower last night as escalating violence in Iraq sent shivers through markets. The ripple effect on oil prices was large with the commodity jumping to an 8 month high & this weighed heavily on airliners in particular. On the eco front retail sales rose by 0.3% in May which fell short of the 0.6% estimate and jobless claims for the week came in at 317k, higher than the 310k consensus forecast. 8 out of 10 industry groups fell last night with industrial and consumer discretionary sectors falling the most taking their cue from the higher oil prices and weaker than forecast retail sales figures. After the close Intel rallied as it raised its forecast for Q2 revenues on higher demand for its products. European markets traded weaker in the wake of the World Bank’s softer growth forecast and as investors focused on increasing turmoil in Iraq. The FTSE100 posted a small gain, with the bourse weighed by losses in the mining space. UK house prices rose in May but demand showed signs of a slowdown. ITV PLC managed to gain ahead of the soccer world cup. The broadcaster received the rights to continue coverage of the 2018 & 2022 World cup. Deutsche Lufthansa declined on the DAX on the back of a broker downgrade. Alstom shares rose on a potential bid for its energy assets. The JSE (-0.12%) ended Thursday in negative territory despite the Financial & Industrial sector managing to gain. Declines in the resource space weighed on the bourse. AGL (-2.9%) suffered from a broker downgrade with forecasted lower iron ore prices hurting BHP (-1.7%). Lonmin (+7.9%) rallied after reaching an agreement with a trade union that may end the strike. AMS & IMP however lost ground. Mediclinic was in the headlines after the company raised R3.1 billion via a share sale to institutional investors. Aspen (+3.3%) & Netcare (+1%) were also strong. Value traded at 5pm was around R 15.8bn with the currency at R 10.68 vs. the USD. Trading Ideas 1) Short MPC from R181.50. In high interest rate conditions we believe this stock is highly overbought. It’s also trading higher than analysts 12 month target price on this stock. 2) Long SHP from R159. Reached its head and shoulders target of R155 and found support. With this stock oversold we believe it can retest resistance at R165. 3) Long IMP from R113. Platinum strike will most probably end today when AMCU takes wage proposals to their members, which will be very positive for our platinum miners.
Posted on: Fri, 13 Jun 2014 07:20:06 +0000
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