Capio Capital Market Overview and Trade Ideas The Far East trades relatively weaker this morning as investors take in a weaker HSBC PMI number as well as digest last night’s Fed minutes. The Hang Seng managed to trade up after a weak opening as energy and IT counters gained ground. The heavily weighted real estate sector traded mixed. A weaker Yen helped the Nikkei to rise but a better than expected trade number trimmed gains as the Yen clawed its way back. Losses in Alibaba weighed on Softbank’s results with retailers under pressure after October same store sales missed estimates. The ASX traded down (-0.97%) on the back of losses in the mining space as commodity prices continued to slide. A volatile session saw Wall Street end the day in the red as investors digested minutes from the Fed. There was no clarity on when interest rates would be hiked. 7 of the 10 S&P components lost ground with Telco counters the laggard after Verizon Communications lost 1.4%. Retailers managed to outperform after companies from La-Z Boy to Lowes and Target topped estimates Staples jumped over 9% for the 2nd biggest advance on the S&P. On the economic front, US housing starts fell 2.8% while residential construction permits touched a 6 year high. For more on the FOMC minutes released, see our Economics section. Markets traded mixed ahead of the Fed’s minutes of the meeting with miners weighing on their respective bourse. Greece’s ASE index, posted gains over 2%. Royal Mail declined over 7% after the postal company faced limited growth due to increased competition from companies such as Amazon. UK lawmakers voted to allow pub tenants to buy beer from any source and not just from the property owner hurt pub companies. A better than expected ZEW survey supported sentiment while Iron ore producers came under pressure after their market faced an oversupply of the commodity. The Top40 Index recorded another day of losses, underperforming other emerging markets to close the day down -0.62%. Declines in heavyweights, AGL (-2.1%) & BIL (-1.4%) hurt the mining sector despite gold counters posting big gains (GFI +7.3%, HAR +1.6%, ANG +2.6%). Declines in NPN (-2.9%) weighed on the industrial sector with telco’s and healthcare stocks ending in the red. Financials closed slightly lower In the news, TBS (-0.33%) declared a 9% increase in its dividend with group income up 15%. Value traded at 5pm was around R 15.3bn with the currency at R 11.06 vs. the USD. *SARB Interest Rate Decision at 15:00 (EXP no change and to remain at 5.75%) Trading Ideas 1) Long MTN from R220. Stock is trading at its 200 day moving average and has significant support at R220, we believe these are good levels to start building a long term position. 2) Long SBK from R138.00. Stock has broken out of a inverse head and shoulders and with the reserve bank not expected to increase interest rates on Wednesday we believe this a good opportunity to build a position. 3) Short TBS from R376. The stock came out with strong results yesterday without a reaction on the share price, we believe the results have already been priced in and that the stock has some downside from these levels.
Posted on: Thu, 20 Nov 2014 07:05:46 +0000
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