In Stockhead's article, our Head of Trading, Trent Primmer, was interviewed to share some trading highlights of the week.
Activity this week was led by continued support across the broader commodity space, Trent Primmer said.
While trading in core commodities such as oil and gold was “relatively choppy” throughout the week, Primmer said the underlying drivers of the post-COVID commodity cycle were still in place.
In turn, that flowed through to strong demand for two more IPOs heading into the Easter break. Trent said:
"We’re still seeing a lot of that same rhetoric around a strong commodity cycle, and that’s manifesting where people are prepared to pay a premium on-market once (companies) hit IPO."
He cited the examples this week of Kincora Copper, which listed at 20c and closed higher on day one.
That was followed by Peregine Gold which had a “cracker of a debut” yesterday, Primmer said, also listing at 20c and trading as high as 28c before closing at 24.5c.
As head of trading at Barclay Pearce, Primmer also keep a close eye on money flows and the where momentum is building in different corners of the market.
This week, he flagged two high-profile global events:
But for now, neither of those events appear to pose a systemic threat to the broad reopening trade that’s helping to fuel demand for stocks, Primmer said.
Trent also flagged the ongoing rise in bond yields accompanying the economic rebound.
- Trent Primmer, Head of Trading
Also supporting risk appetite on Wednesday was a strong March PMI print (manufacturing and services) out of China, while Democrats in the US continue to work towards a huge infrastructure bill. Trent said:
"You’ve got household savings rates extremely high, vaccine rollouts, and there’s still plenty of fiscal stimulus which is driving the economy as well. So that’s easing a lot of concerns around the global economy. In that sense I think it’s only natural that longer term confidence is starting to see yields tick higher."
Among the key industry catalysts this week, Primmer highlighted news on Tuesday of a $1bn defence spending initiative by the Morrison government to build new missiles and guided weapons. Trent added: "We’d expect some domestic weapons manufacturers and defence companies to benefit from that".
Electro Optic Systems (ASX: HXG)
Trent thinks that one on everyone’s radar would be Electro Optic Systems (ASX: EOS). They provide remote controlled weapon systems and state-of-the-art weapons units and optics, so if the government is looking domestically, they could benefit.
Santos (ASX: STO) and Woodside (ASX: WPL)
Elsewhere, Trent flagged two large cap oil & gas plays that could see a tailwind from broader support for oil prices as economic activity tracks steadily in the direction of growth.
- Trent Primmer, Head of Trading
In turn, Trent's preference for Woodside stems from the fact they have “some of the best and largest exposure in the world to LNG”. He added:
"In my view there’s a benefit to owning those stocks in your portfolio regardless, but particularly when the oil price is tracking higher."
To read the full Stockhead's article, click here.
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