The Match Out: ASX ends a tough month in the red

It was a poor way to end a tough month for stocks, with the ASX getting knocked lower from lunchtime onwards, eventually losing 1.2% having been higher in early trade. It wasn’t all bad news though, with Materials and Energy closing the session higher. But when the banks fall by an average of 2% it’s always going to be tough going, from an index perspective.

• The ASX 200 finished down -80pts/ -1.23% at 6474
• The Material sector was the best on the ground (+0.67%) while Energy (+0.07%) also closed in positive territory.
• Industrials (-3.04%) and Discretionary Retail (-2.72%) were the weakest links.
• Gold stocks were the standout today, Newcrest (ASX: NCM) +2.67% while the mid-caps did better, St Barbara (ASX: SBM) that we own from higher levels +6.47% was strong.
• The end of the month and the end of the quarter for the ASX today, with the ASX down -1.43% for the three months (or up +1.08% inclusive of dividends)
• We saw a very good bounce in July +6.20%, a flat August -0.09% and a very weak September -5.71% (before dividends) – US stocks are worse, down around 8% this month.
• This begs the question, what generally happens after a weak September as measured by the S&P 500 being down by more than 7%?
• 83% of the time, October bounces back, and in most cases, with some force. Of the 7 times this has happened since 1974, only once (GFC in 2008) has the market failed to close higher in October, with an average return of +4.3%.
• You can always find a stat to back up a point of view, and this week we’re largely back to fully invested in the market, so we’re clearly speaking from a biased position – but it paints an interesting picture.
• In terms of stocks this quarter, there were some great performers, Pilbara (ASX: PLS) topped the board up +99%, Whitehaven Coal (ASX: WHC) +95%, Lovisa (ASX: LOV) +56%, Oz Minerals (ASX: OZL) +45%, IGO (ASX: IGO) +38% to name a few i.e. it wasn’t all doom and gloom!
• Sandfire (ASX: SFR) -0.53% announced a new CEO and had a production upgrade today, both positive pieces of news in our view.
• AGL Energy (ASX: AGL) +3.64% was upgraded to Outperform from Credit Suisse this morning with $8.20 PT following their strategy update yesterday.
• Casting an eye across the MM Portfolios for the quarter, preliminary figures (that could change slightly) show Growth +3%, International Equities +7% and Emerging Companies +5%, while the Income Portfolio was down 1%.
• Iron Ore was ~0.50% higher in Asia today.
• Gold was up overnight and edged higher today, trading at around US$1665 at our close.
• Asian stocks were mostly lower, Hong Kong flat, Japan off -1.4% while China was down -0.31%
• US Futures are up marginally, although they had a very choppy session.

ASX 200 chart

Sandfire $3.73

SFR -0.53%: the copper miner announced the CEO was stepping down, coupled with a production upgrade as they approach eh end of their first quarter. After 15 years in charge, Karl Simich will leave the company, replaced by the COO while a global search gets underway. The company bumped up full-year copper production guidance by 2.5%, setting themselves up for a strong first quarter production update next month. The balance sheet looks in good shape, paying the $US118m due for the funding facility around their acquisition of MATSA while their ANZ corporate facility will also be reduced by ~$US100m. We see the CEO's departure as an opportunity to refresh their outlook and improve communication to the market, though shares were slightly lower today.

Sectors this week (Source: Bloomberg)

Stocks this week (Source: Bloomberg)

Broker moves

• Iress Raised to Hold at Shaw and Partners; PT A$11.60
• AGL Energy Raised to Outperform at Credit Suisse; PT A$8.20
• Premier Investments Cut to Neutral at Citi; PT A$25.30
• Beach Energy Raised to Neutral at Macquarie; PT A$1.50
• Capricorn Metals Raised to Outperform at Macquarie; PT A$3.30
• Airtasker Rated New Buy at Shaw and Partners
• Lifestyle Communities Rated New Accumulate at Ord Minnett
• Ingenia Rated New Buy at Ord Minnett; PT A$5.11

Major movers today

Have a great night,

The Market Matters team.

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