Article / 25 September 2014 at 8:13 GMT

Australia Market Wrap: Iron giants keep ore port humming

Trading Desk / Saxo Capital Markets
Australia
  • Port Hedland tugboat strike averted
  • JB Hi-Fi down 3.95% on no news, competitors steady
  • AUD continues its decline, heads into oversold territory

By Saxo Capital Markets
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Source: Saxo Bank

It was a flat day on the Australian market with the ASX 200 closing at 5382.2. After a good lead from the US following strong housing market data, Sydney appeared ready to follow suit, posting an early uptick before it was ground away by the end of the day.

The Australian dollar continued to fall, closing at a seven-month low after the Kiwi took a heavy hit. At the Reserve Bank of Australia, governor Glenn Stevens signalled that the RBA is considering steps to limit home loans. With first-time home buyers being priced further and further out of the market, the RBA sees macro prudential tools as a means to stem the extent of loans made available to investors.

The banks offered mixed signals. with CBA and NAB up 0.3% and 0.21% respectively. On the other hand, ANZ and WBC were down 0.19% and 0.8% respectively. 

In materials, BHP and RIO were both in the green today, up 0.29% and 1.23% . In related news, BHP and FMG celebrated a major win today, preventing the closure of the Port Hedland port following the government's passing a key amendment to the Fair Work Act.

Port Hedland
BHP Billiton and Fortescue have won their battle with Port Hedland's tugboat workers, 
averting a strike and keeping the busy iron ore port open. Photo: iStock

Sirius Resources (SIR) released its presentation held in Melbourne today, which saw its share price lift a pleasant 6.75% after a dramatic 14.8% fall yesterday.

Both Nufarm (NUF) and TPG Communication (TPM) continued their positive performance after beating market expectations in their preliminary reports earlier this week. NUF was up another 3.5% and TPM was not far behind with a 3.11% gain. Both stocks offered a good day's trading range for leveraged investors.

A surprise underperformer today was electronics retailer JB Hi-Fi (JBH), down 3.95%. With no company news released, a weaker Aussie dollar and no direct retail figures given to the market, it would seem that sentiment towards the company is less favorable than at competitors Dick Smith and Harvey Norman. It will be interesting to see if the ASIC short list grows with JBH in the days to come, as it is a favourite with this group of investors.

Medusa (MML) once again graces the top movers list. With the gold price falling away of late, MML does not have a friendly trend. If the trends are to reverse in time, traders should keep in mind that this company's daily range is wider than most and may offer quick profits if played well.

The SPI 200 futures index started on a positive note, hitting the intraday high at 5415 before selling down throughout the day. It finished at 5371, which is nine points below yesterday’s close of 5380. 

This indicates that bearish sentiment still exists in the market. The 5400 level remains the interim resistance unless there is a significant break out of the level (supported by a close above it). The key support is at 5300, where there may be some value buying opportunities.

AUDUSD bounced back overnight from its seven-month low, then sold off again after failing to touch 0.8900. It broke the previous day's low of 0.8831 and the downside momentum is looking to continue in the near term. 

Heading into the European session, 0.8800 is expected to be broken and the next support is at 0.8756, which marked the low of January 20. AUDUSD seems to be oversold, therefore a possible reversal trade may be on the horizon, possibly somewhere between 0.8756 and 0.8659.

-- Edited by Michael McKenna

Australia Market Wrap is compiled by the Sydney trading desk at Saxo Capital Markets

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