Good Morning,
“A pinch and a punch”… yes, it’s the first day of the month… and boy, do we have a busy month ahead.
So July was a very good month for equities…
Brexit… what Brexit?
A potential “hung-parliament”… who cares….
Japanese stimulus that failed to stimulate growth and a Chinese market rippled by debt….
As we’ve been writing for the past few weeks, bad news is now good news, but expect further upside in equities, as the reporting season generally “disappoints”....
So what can we expect in August?
Well, fasten your seatbelts, the AUS reporting season is here and it sure will be interesting…
Here at PEAK, we will busy trading the + and -earnings…
Empirical research suggests that stocks tend to “outperform” or “underperform” relative to the index (known as earnings drift), if they report better/worse than expected earnings relative to analyst forecasts…
For instance, Resmed (RMD) reported NPAT of $352M, lifted its dividend by 10cps and raised its FYoutlook… a positive sign.
As RMD beat expectations, we see the positive announcement drift to drive RMD’s share price higher over the next few weeks relative to the market…
Certainly one to watch…
For those interested in learning more about the strategy, please be in touch.
On Friday night, US stocks closed mostly higher (SP500 +0.16%) as the government said U.S. gross domestic product grew at a seasonally adjusted rate of 1.2% in the second quarter, lower than the consensus among economists of 2.6%.
U.S. crude oil had its biggest one-month decline in a year, falling 14% to $41.60 a barrel as rising production and a glut of gasoline around the world renewed concerns of an oversupply.
Who says oil is in a bull-market?
We expect further downside in the near-term as US inventories are still very high, so stay-clear of high cost producers….
The SPI is up 13 points this morning
Niv Dagan is an Executive Director of Melbourne based boutique funds management and corporate advisory firm, Peak Asset Management (www.peakassetmanagement.com.au). He is also a regular financial commentator on Sky Business.
