Top ASX stocks to watch

Australia’s ASX index looks poised for further gains, as long as the ‘Remain’ camp can win the UK’s referendum on continued EU membership. Macquarie Group, BlueScope, Myob Group and BWP Trust have strong upside momentum.

Australian stock exchange building exterior
Source: Bloomberg

The ASX has bounced strongly off 5100 and there looks to be enough momentum to carry it back above 5300 again. The EU referendum vote in the UK will dominate trading this week, and we have seen a noticeable move in positioning towards the ‘Remain’ camp winning the vote rather than the ‘Leavers’. Were ‘Remain’ to win, the relief rally could be enough to take the ASX back above 5400.

The market internals for the ASX do seem to be pointing to further gains. Companies at new four-week lows have dropped dramatically, indicating sentiment in the index improved, which bodes well for the index this week.

The future price-to-earnings (P/E) ratio can tell traders if the valuation of the ASX 200 is ‘expensive’ or ‘cheap’ relative to its long-run average. While this can be used to time reversals, it is best used in conjunction with other inputs like market internals, price action and technical analysis. The current level is 16.88.

50-day moving average: 63.3%

200-day moving average: 72.1%

The 50-day moving average collapsed last week, but the short-term nature of the sell-off has seen only a minor dip in the 200-day moving average.

Four-week high: 6.5%

Four-week low: 10.0%

Four-week lows and highs have both fallen back, arguably making a move up look more likely than not.

Week-on-week decrease in short positions

Trade of the week – Macquarie Group

Macquarie Group Ltd has definitely been a key beneficiary of the recent risk-on rally. The company has significant UK business and would certainly be impacted in the event of a Brexit vote winning at the ballot. The move in market expectations towards a ‘Remain’ win seems to be benefitting the stock.


The risk-on rally and the renewed sell-off in the US dollar have clearly benefitted steel-maker BlueScope. The stock looks like it increasingly has the momentum to retest its mid-April high of A$7.00.

Myob Group

Myob Group has now had four days of back-to-back gains and momentum increasingly looks to be behind the stock. On a technical level it has also broken through the Ichimoku cloud again, further indicating that it may be ready to retest A$3.50.

BWP Trust

A lot of the major property REITs in the ASX have gained over the past two sessions, but BWP Trust looks most primed for further gains. It has consolidated between A$3.60 and A$3.70, but a strong risk-on rally in markets could see break higher. 


SGM’s steady decline since mid-April looks set to continue. Sentiment in the stock continues to weaken, and a further drop towards A$6.00-A$6.60 seems perfectly feasible.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.