Article / 27 May 2015 at 7:55 GMT

Australian Market Wrap: Ore can't move miners

Trading Desk / Saxo Capital Markets
Australia
AUDUSD in range ahead of capital expenditure print
Supermarket shares plunge; Woolworths loses over 2%
Adelaide Brighton shares surge by nearly 5%

By Saxo Capital Markets Australia

AUDUSD traded in a narrow range but found an interim support level at 0.7725 and recovered somewhat from there. 

The US dollar's upside momentum is expected to continue as there are no key economic data releases set for tonight. Tomorrow’s AU private capital expenditure print, however, will be an important figure as the previous numbers came out weak. 

Any disappointing result would drive AUDUSD below 0.7700. The interim resistance level is at 0.7800.

Untitled
Adelaide Brighton was one of the day's rare surges in Australia. Source: Saxo Bank

Stocks gapped down on the open on the back of negative leads from the Europe and the US.

Supermarket operators were the weakest sub-sector today as Woolworths Ltd tanked 2.07% to AUD 27.94 and Wesfarmers Ltd lost 1.54% to AUD 43.40.

Telecommunication companies (typically seen as defensive in nature) couldn't shake off the ambient mood with Telstra Corporation (Australia's largest telecommunication company) losing 1.27% to AUD 6.21 while Spark New Zealand tumbled 3.14% to AUD 2.47. 

TPG Telecom dropped 1.98% to AUD 8.91 and the telecommunication sector lost 1.21% for the day.

Metal miners sold off as well despite the price of iron ore gaining over 2.5% overnight. BHP Billiton lost 1.61% to AUD 29.34, Rio Tinto followed suit down 1.68% to AUD 57.31 while pure iron ore miner Fortescue Metals settled 1.67% to AUD 2.36 after trading positively for most of the session.

Iron ore
Iron ore prices might be heating up, but Aussie market sentiment 
is holding investors' feet to the flame. Photo: iStock

South 32 (BHP Billiton's recent spinoff) shed AUD 0.05 to AUD 2.25. The stock now sits AUD 0.12 above its debut price from May 18. Alumina Limited, a firm specializing in bauxite mining, alumina refining and selected aluminum smelting operations (through its 40% ownership of Alcoa World Alumina and Chemicals) closed the day AUD half a cent lower or 0.29% to AUD 1.70 after falling as much as 2.9% at its intraday low. 

The Sydney trading desk has released a short trade for this stock in this morning's Todays’ Trade.

Selling in the financials sector (which shed 0.70%) was led by Westpac Bank as its share price dropped 1.34% to AUD 33.20 followed by National Australia Bank which lost 1.29% to AUD 33.56. Commonwealth Bank of Australia and ANZ Bank fared slightly better, down 0.6% and 0.52% respectively to AUD 84.13 and AUD 32.52.

Only the information technology sector saw a positive day (up 0.55%) led by gains in Computershare Ltd. The provider of services in transfer agency and share registration, employee equity plans, proxy solicitation, and stakeholder communications lifted 1.94% on increased volumes to AUD 12.61

Adelaide Brighton moved impressively in what can only be described as a depressing day for Aussie markets. Adelaide Bridgton rallied 4.8% when the company's AGM presentation and outlook was released. While the AGM does echo its already-known-to-markets results, the firm's outlook elaborates on how the company has moved since the released results and on what to expect this year. 

The company strategies has three complementary elements: cost reduction, growth in the lime business and vertical integration into downstream concrete and products. The group's balance sheet remains strong, aided by healthy cash flow and an ideal capital structure of 31.7%. 

Treasury Wines was the ASX100's largest loser, down 3.17% to AUD 5.20. Treasury Wines has failed to hold recent gains in today’s selloff and is now back at a key pricing level for the past 12 months. Any weakness from here will leave the next floor of resistance at AUD 4.75.

Aristocrat had an outside day and was sold off , reversing most of yesterdays gains. The company closed down 3.1% to AUD 8.12 and is expected to make another swing tomorrow as the market looks to find its place.

ASXSP200 briefly made an intraday high at 5,752, but mining stocks led the market to the downside. Today’s decline seems to be mainly due to some profit taking from yesterday’s sharp rally. 

At present, 5,749 remains as a key pivot level and we expect the ASXSP200 to trade around this level. E-mini S&P 500 futures are likely to rebound as we saw positive signs for price action towards the close of the session yesterday.  

— Edited by Michael Mckenna

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

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