Today's Trade: S&P/ASX 200 rebounds, miners gain, NZDEUR opportunity
- The pattern of the past week indicates upside momentum for the S&P/ASX 200
- Higher iron ore prices have given both BHP and Rio a boost
- China's aluminium supply glut is likely to affect global prices and equities
By Saxo Capital Markets Australia
Overnight / early trade
Equities kicked off to a robust start today, with most leading S&P/ASX 200 stocks making gains. Mining and energy shares were higher soon after the start of trading on the ASX. Iron ore prices rose overnight, giving the share prices for both BHP Billiton and Rio Tinto a boost. The big four banks all moved higher as well. At 10:39am, the ASX 200 was 59 points higher, or up by 1.o per cent, at 5904.00
- The S&P/ASX 200 Index futures contract rose 0.5% to 5,862; futures relative to estimated fair value suggest an early gain of 0.6%.
- Bank of New York Australia ADR Index +1.4%; BHP Billiton ADR +3%, rises for second day; Rio Tinto ADR +3.4%
- Spot gold rose 0.6% to US$1,194, maintaining its trading range for the past month. Gold stocks: NCM, NST, AQG, EVN, KCN, RMS, SLR
- WTI climbed 2.1% to US$ 57.46 but it was Brent who stole the show, up 3.1% to US$64.76. Saudi Arabia took out 20 airstrikes against Yemen yesterday, limiting their supply of oil to the global economy. Oil stocks: WPL, STO, SEA, BPT, OSH, HZN, DLS, AWE, KAR, ORG, SXY
- Iron ore traded 1.4% higher at $54.82 on added sentiment the last years sell-off may be drawing to an end, although no sharp bounce is expected according to PIMCO. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, ARI, BCI, SDL
- Base metals were mixed with copper up 0.8% to $5,960. Aluminium on the other had was hit hard, down 1.4% and falling again below $1,800 to US$1,782. The AFR yesterday reported that China, which produces 50% of the world’s aluminium, has scrapped an export tax on the lightweight metal for bars and rods. This will encourage the supply glut in China to flow over its borders and put downward pressure on prices on the LME. Copper stocks: PNA, OZL, SFR; Nickel stocks: WSA, SIR; Aluminium stocks: AWC
- Fortescue (FMG): Targeting ~$2b additional debt repayments senior unsecured rating cut by Moody’s after bond sale
- ResMed (RMD): 3Q adj. EPS 65c vs est. 65c; NOTE: ADRs -3.9% post-mkt
- Slater & Gordon (SGH): Raises ~A$120m in retail component of entitlement offer
- Suncorp (SUN): Responding to more than 7,500 claims after severe and deadly storms hit the Australian state of New South Wales this week
- Telstra (TLS): In talks with Netflix on hosting service: AFR
See week ahead for this week, by our Asia Macro Strategist, KVP (KVP's Macro Take: China eases rates - so it's equities risk-on).
- German Ifo Business Climate, Eurogroup Meetings,
- Core Durable Goods Orders m/m, Durable Goods Orders m/m
Current ASX trades
- AMP Limited (Ticker: AMP:xasx): Entered long position on February 6 at $6.10. First profit target was reached on February 18 at $6.49 (C +6.4%) and second profit target at $7.12 (C +16.7%) and third and final profit target at $8.00 (C +31%) remains in place. Stop loss trailed to entry price of $6.10
- Flightcentre (Ticker: FLT:xasx): Entered short position on March 9 at $43.05. Stop loss has been trailed now to our open price of $43.05 (-0.0%). First profit target was reached on Mar 11 at $40.56 (+5.8%), second profit target was reached on March 16 at $39.74 (+7.6%) and final profit target is $38.40 (+10.8%).
- Stopped out of AAC yesterday @ 1.58.
- Platinum Asset (PTM): Raised to buy vs hold at Morningstar
- Spotless (SPO): Raised to hold vs sell at Morningstar
- Whitehaven (WHC): Cut to sell vs hold at Morningstar
- Computershare (CPU): Cut to hold vs buy at Morningstar
Upside momentum for ASXSP200.I:
This week’s price moves have been choppy and the S&P/ASX200 has traded sideways, however whenever it made an intraday low, the S&P/ASX200 was able to rebound to a strong close. This indicates that the upside momentum still exists and we expect to see a positive day today trading above the support level 5,867.
Sources: AFR, SMH, CNBC, BBG, WSJ
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– Edited by Robert Ryan
Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets.