This week, with Brexit dominating the news, IG Markets’ Evan Lucas says there are stocks exposed to the UK that may experience short-term pain.
“Clydesdale (CYB) is facing the uncertainly that all EU banks now face: liquidity questions, ability to access the single market and if savings head into safe haven asset rather than being used in the general economy, bank profits face uncertain times. SocGen, Barclays, RBS, Lloyds and Deutsche bank were smashed on Friday losing as much as 35%. Clearly CYB will be swept up in the short-term turmoil as economic treaties begin to be renegotiated and the future of EU/UK banking is debated.”
Lucas argues Henderson Group is another stock that could experience short-term Brexit pain.
“The slashing of UK GDP and the UK finance services fall out (offshoring to the EU) also is likely to impact HGG’s share price; the funds growth profile will be reassessed.”
On the other hand, with gold hitting a 2-year high on Friday, gold producers are the “deviated trade”.
“The smaller you go, the bigger the moves granted,” says Lucas. “However the best and brightest of the lot remains Northern Star Resources(NST). The second largest producer in Australia has the best balance sheet and best Teir-1 assets in the current market and for that reason is my choice in this space.”
Michael McCarthy from CMC Markets likes CSL (CSL), a stock he says he’s struggled to buy in the past because it was “too expensive”.
“Taking advantage of general market weakness, I’m very happy to grab this stock around the $100 mark,” he says.
He is not so keen on Newcrest Mining (NCM) because he believes the support for the gold price is likely to be short-lived. “Looking for chart based reversal signals to sell,” he says.
Gary Stone from Share Wealth Systems doesn’t have any likes this week but stocks such as Newcrest, ABC Brighton (ABC), Whitehaven Coal (WHC), Evolution Mining (EVN) and St Barbara (SBM), while not on the ‘don’t like’ list “may be overbought in the short term”.
However, he doesn’t like Greencross (GXL) this week.
“GXL has failed to break through a key resistance zone between $7.40 to $7.70 despite numerous attempts since March this year,” says Stone. “Technically it looks like it may be heading lower to a key support zone between $5.15 to $5.50, which is some 17% to 22% below the current price.”
Morgans’ Raymond Chan likes Telstra (TLS) – “yielding back to 6%”, but dislikes BT Investment Management (BTT), saying “uncertainty out of its U.K. Fund Management Business after Brexit vote last week”.
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