Capio Capital Market Overview and Trade Ideas Regional bourses are trading mixed this morning as investors digested economic reports out of the US and a soft lead from Wall Street. The Hang Seng traded roughly flat after reaching a 7 month high in the previous session. Property developers were noticeable gainers while retailers were weak. The ASX trades firmly in positive territory despite retail sales numbers coming in weaker than expected. Miners outperforming as copper and iron ore prices continued to rise (BHP +0.98%, RIO +0.74%). The Nikkei traded down -0.22% at the time of writing with energy & financials underperforming. A weaker Yen cushioning the blow. US markets ended the day slightly up as investors digested the latest jobs data. The Dow rose 20 points while the S&P closed at 1974 with each index at a record close. Constellation Brands jumped after posting better than expected quarterly results with Rackspace also in the headlines after reports the company may go private. Bank of America & Citigroup led a weak banking sector while declines in the utility sector weighed on the S&P. In after-hours trade, Synnex Corp declined on the back of its outlook statement while Genesee & Wyoming rose on the back of directors buying shares. All eyes will be on today’s payrolls data with economists expecting a gain of 215 000 non-farm jobs. The unemployment rate is expected to come in at 6.3%. European markets managed to end up after ADP employment numbers out of the US came in better than expected. Plans of an expansion into Mexico saw BMW advance with Roche also in the headlines after the pharmaceutical company plans to buy Seragon Pharmaceuticals for $1.7 billion. Orange came under pressure after the telco company stopped its pursuit of a merger in France. Alcatel Lucent however gained on the back of a broker upgrade. Investors were reluctant to make any major decisions ahead of the ECB’S interest rate announcement today. The local market continued to gain with the Top40 closing at a new record high of 46888. Financials however underperformed. Gains in NPN (+5.4%) supported the industrial sector with a weaker Rand helping BTI & SAB to rise. APN recorded its 6th day of declines.AEG came under pressure after the release of its trading statement. The construction company expects FY EPS to fall as much as 10%. In the news, BVT agreed to buy banking unit Grindrod Bank. Miners also were strong with the Platinum sector outperforming as investors looked for value after the strike (IMP +2%, AMS +1.7%). EXX continued to lag.Value traded at 5pm was around R 14.7bn with the currency at R 10.75 vs. the USD. Trading Ideas 1) Long SHP from R154. Stock is totally oversold, with clothing retailers trading at record highs in high interest rate conditions we believe a food retailer is a strong buy in current conditions. 2) Technical Trade: Long MDC from R80. Strong support level at R80, analyst consensus target price on the stock is R86. 3) Short TBS from R312. Stock is massively overbought and we expect it to retest levels at R295.
Posted on: Thu, 03 Jul 2014 08:19:03 +0000
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