Evening Wrap: ASX 200 bounces, CBA fails to rally, Australia's unemployment unexpectedly jumps

Retailers, Tech and Real Estate support a much-needed bounce for the ASX 200, CBA falls another 1.5%, Australia's unemployment rate unexpectedly jumps to 3.7% from 3.5% and another long list of UBS notes for companies that reported today.

Let's dive in.

ASX 200 Session Chart

Strong buying shortly after open (Source: TradingView)

Markets

The ASX 200 staged a much-needed bounce after the -1.1% nosedive on Wednesday. Though, the question remains, is this just a bounce from an oversold state (down -2.7% since February 6th) or is the dust finally starting to settle?

• Discretionary stocks led thanks to Wesfarmers (+4.2%) and a broad-based lift among beaten up retail names

• Technology was another strong performer with notable standouts including Wisetech (+2.7%), Xero (+3.6%) and Block (+9.2%)

• Real Estate was bumped up by solid results from Goodman Group (+2.3%)

• Telcos were also supported by decent results from Telstra (+2.2%)

• Banks failed to bounce with weakness from Commonwealth Bank (-1.3%) offset by Macquarie Group (+1.6%)

Economy

Australia's unemployment rate unexpectedly jumped from 3.7% in January from 3.5% in the previous month.

• Consensus expected the unemployment rate to remain unchanged at 3.5%

• 11,500 jobs were lost compared to expectations of a 20,000 gain

• "January is the most seasonal time of the year in the Australian labour market, with people leaving jobs but also getting ready to start new jobs or return from leave." - Bjorn Jarvis, ABS Head of Labour Statistics

• "This January, we saw more people than usual with a job indicating they were starting or returning to work later in the month."

Latest news

Market Insights

Talking Technicals: ASX 200

An oversold bounce or some genuine buying? What you don't want to see is an aggressive rejection of the 20-day moving average over the next few days.

Source: TradingView

A decline in market breadth

I run a very simple stock scans to go through stock charts: The stock must be above its 200-day moving average and the share price must be above 10 cents. The number of stocks appearing in the scan has been progressively shrinking:

• 341 at the start of Feb

• 311 a week ago

• 253 yesterday

It goes to show that the market's had this massive run up/breadth thrust and now its cooling off, but rather quickly (a 26% fall in about two weeks).

Commonwealth Bank (Again)

On Wednesday, the Evening Wrap talked about how the next few days will be key for CBA as brokers run the ruler on the results, shift their target prices and institutions rejig their exposure/weightings.

Today, we've seen some rather bearish notes from many broker notes:

• UBS is Neutral rated and cut its target price from $105 to $101

• Morgan Stanley is Underweight rated with a $88 target price

• Macquarie is Underperform rated with a $94 target price

• Citi is Sell rated with a $85.50 target price

And that's been reflected in CBA's inability to bounce from a rather oversold level, down another -1.5%, on high volumes too (4.5 million shares versus 20-day average of 2.3 million).

Interesting news and movers

Trading higher

• +14.8% Orora (ORA) – Reports 1H earnings

• +14.3% Sonic Healthcare (SHL) – Reports 1H earnings

• +12.5% Ridley Corp (RIC) – Reports 1H earnings

• +10.0% Corporate Travel Management (CTD) – Upgraded to Underperform from Sell at CSLA

• +7.4% Abacus Property (ABP) – Reports 1H earnings

• +7.5% Pact Group (PGH) – Reports 1H earnings

• +6.1% Aurizon (AZJ) – Bounce after 1H results selloff (Wednesday)

• +5.2% Bapcor (BAP) – Reports 1H earnings

• +4.4% Super Retail Group (SUL) – Reports 1H earnings

• +3.0% Graincorp (GNC) – FY guidance

• Tech sector move including PointsBet, Block, Megaport and Zip up more than 3% 

Trading lower 

• -22.6% Enero Group (EGG) – Reports 1H earnings

• -13..3% AMP (AMP) – Reports 1H earnings

• -6.3% Southern Cross Media (SXL) – Reports 1H earnings

• -5.4% NRW Holdings (NWH) – Reports 1H earnings

• -2.8% Whitehaven Coal (WHC) – Reports 1H earnings

• Uranium sector move with Boss Energy, Deep Yellow down more than 4% 

Broker updates 

Another day of UBS commentary for companies that posted half-year results on Thursday.

Telstra (TLS): $4.15 target price with a NEUTRAL rating

• Solid 1H23 result with slight beats across the board

IPH (IPH): $11.00 target price with a BUY rating

• Results were in-line with expectations, with a stronger Asia performance offset by softer ANZ (driven by higher costs). No guidance

Bapcor (BAP): $7.60 target price with a BUY rating

• Results were in line with expectations, if anything, better than feared. Margins manage to marginally increase year-on-year and retail like-for-like sales rose 10%, well-ahead of expectations. Cash flow and cash position was below UBS forecasts reflecting working capital headwinds. Bapcor guided to a slightly better 2H23

Goodman Group (GMG): $23.00 target price with a BUY rating

• A “good result but below UBS estimates, guidance underwhelming”. Goodman guided to operating EPS growth of 13.5% (up from previous guidance of 11%) for FY23, below consensus expectations of ~15% 

Southern Cross Media Group (SXL): $1.70 target price with a BUY rating

• Missed UBS expectations, with the result reflecting “a significant deterioration in trading conditions in the last two months of the year.” Although “Q3 trading conditions indicate modest growth, and SXL has lowered non-revenue related cost guidance.”

Ridley Corp (RIC): $2.35 target price with a BUY rating

• A “strong result” that beat UBS estimates by 6% reflecting “RIC’s execution of internal initiatives and supporting pricing environment within rendering business.” 

Graincorp (GNC): $8.65 target price with a BUY rating

• Earnings guidance flags a massive drop against prior corresponding period ($470-530m vs. $703m pcp) but beat UBS estimates of $445m

Scans