ASX Investors experience once again a choppy session as investor confidence remains subdued resulting in volatile swings of local stocks.
Choppy Trading Session for ASX200
The benchmark index ASX200 rose sharply on the opening, reaching an intraday high of 5171 points and increase of nearly 1.5%. However the positivity was short-lived as stocks dipped shortly after open falling as low as 5047, a swing of 2.5% within a few minutes of trading. Amid the volatility of the past several weeks, such movements appear to be normal, with the only problem being that it is not normal.
The global volatility index fell more than 10% overnight as most developed markets rose and Shanghai somewhat stabilised in the last couple of sessions. A surge in the final minutes of trading pushed U.S. stocks up 1.8% after experiencing a dismal day on Tuesday. Tech stocks led the way as investors bought back into the Googles and Apples pushing the technology focused NASDAQ Composite 2.5% in the green.
Economic Data Disappoints
In local news, economic data has revealed further weakness in the Australian economy. Yesterday, Gross Domestic Product (GDP) for the second quarter of the year missed expectations as the Australian economy grew by a mere 0.2%, to reach an annualised rate of 2%. Growth in our economy remains well below-average levels as a healthy services sector fails to offset weakness in the resource sector. In addition business and consumer confidence remains low despite a stimulating low-interest rate environment.
Retail sales activity for July has contracted 0.1%, which is half a percentage point below the expected 0.4% increase and well below last month’s 0.6% growth rate. Retail data has been upbeat for most of the year causing retail stocks such as JBH, SUL or HVN to outperform the broader market. It is yet to be seen if last month’s weakness is only temporary.
Myer Falls Sharply, 1Page Continues to Reach Highs
Myer Holdings (ASX:MYR) recommenced trading this morning opening sharply lower following the successful completion of an institutional entitlement offer, which was announced earlier this week. MYR entered a trading halt on 1 September following the release of its full-year results and announcing strategic changes that should help the boutique retailer to return to sustainable growth. The Institutional component of the capital raising provides the company with $99m after issuing 105m new ordinary shares at 94 cents. MYR dropped ~17% from its last closing price of $1.13, to match the offer price of 94 cents. MYR has declined 62% in the past 12 months.
Meanwhile cloud-based software service provider 1Page Ltd (ASX:1PG), formerly known as InterMet Resources Limited, continues to break through all-time highs. As of 12:30pm (AEST) 1PG is up 13.5%, propelling the year-to-date return to 370%. Earlier this year the largest online retailer in the United States Amazon.com Inc. has entered into an agreement with 1PG to utilise the 1PG platform. 1PG is the first Silicon Valley company to list on the ASX.
Author: Simon Herrmann
Sep 03, 2015
Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.