Market Wraps

Evening Wrap: ASX 200 cautiously higher ahead of high stakes Fed rate decision

Wed 02 Nov 22, 4:42pm (AEST)

The S&P/ASX 200 closed 10 points higher, up 0.14%.

The local sharemarket extends its winning streak to three, resources rally amid rumours of China's reopening, Australian new loan commitments for housing tumbles and all eyes on the Fed's interest rate decision tomorrow at 5:00 am AEDT.

Let's dive in.


Today in Review

Wed 02 Nov 22, 4:28pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 6,986.7 +0.14%
All Ords 7,177.8 +0.11%
Small Ords 2,840.5 +0.16%
All Tech 2,093.4 -0.82%
Emerging Companies 2,122.2 +0.01%
Currency
AUD/USD 0.6414 +0.32%
US Futures
S&P 500 $3,876.75 +0.28%
Dow Jones $32,745.0 +0.18%
Nasdaq $11,374.0 +0.37%
Name Value % Chg
Sector
Materials 15,808.6 +1.13%
Energy 11,573.3 +1.12%
Utilities 7,232.5 +0.34%
Consumer Discretionary 2,905.3 +0.23%
Financials 6,599.1 +0.06%
Health Care 41,258.0 -0.13%
Industrials 6,306.6 -0.20%
Communication Services 1,416.9 -0.67%
Consumer Staples 12,370.5 -0.68%
Information Technology 1,446.5 -1.34%
Real Estate 3,031.6 -1.64%

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Markets

The ASX 200 was cautiously higher for a third consecutive session thanks to gains from heavyweight Energy and Materials names.

  • Energy led to the upside as oil prices rallied on rumours of a full reopening in China. Its worth noting that Woodside closed at its highest level since June 2019

  • Materials also outperformed thanks to a bounce in base metals, notably iron ore and copper

  • Technology stocks sold off but in-line with the Nasdaq’s underperformance and jump in bond yields

  • Real Estate led to the downside, mostly due to a -3.1% selloff from heavyweight Goodman Group 

  • 50% of the top 200 advanced

Economy

Australian Industry Group Manufacturing Index eased to 49.6 in October from 50.2 in September.

  • “Manufacturing was broadly stable in October, the third month of even results.” - Australian Industry Group

  • “Results were mixed by sector – with consumer-oriented manufacturers performing strongly, but industry-oriented declining.”

  • “New orders was the only activity indicator in expansion in October. All activity indicators except employment declined from September, showing weakening conditions in manufacturing.”

  • “Input prices continue to grow, but at lower levels than previous months.”

Australia building permits fell -5.8% month-on-month in September from 23.1% in August.

  •  "The fall in approvals was driven by private sector houses, which declined 7.8 per cent. Approvals for private sector dwellings excluding houses fell 1.8 per cent." - Daniel Rossi, Director of Construction Statistics at the ABS

Australia new loan commitments for housing fell -9.3% month-on-month in September from -2.7% August.

  • "Although housing lending has fallen for four consecutive months, the value of loan commitments in September remained well above pre-pandemic levels. Owner-occupier loans in September were 23 per cent higher than in February 2020, while investor loans were 60 per cent higher.” - Katherine Keenan, ABS Finance and Wealth Spokesperson 

Commodities 

Most commodities inched higher after rally overnight on speculation that China assembled a committee to assess how the country will exit its zero-covid strategy. Though, Chinese Foreign Ministry spokesman Zhao Lijian said he was "not aware" of such committee.

  • Iron ore futures on China's Dalian Commodity Exchange +2.8%

  • Brent crude +1.1% to US$95.7 a barrel

  • Copper +0.9% to US$3.5/lb


Latest news


Post market brief

The ASX 200 mustered up a small gain ahead of the Fed's interest rate decision that'll occur at 5:00 am AEDT on Thursday.

US markets have surged off mid October lows amid growing expectations that November will be the final outsized 75 bp rate hike, followed by 50 bps in December and 25 bps next February.

At least year-to-date, we've seen so many rallies fizzle following hotter-than-expected inflation prints, strong job reports and hawkish Fed rhetoric. Could the overnight event be another rally killer?

Its worth noting that the S&P 500 has mostly rallied on rate hike days, with an average gain of 1.69% (versus consensus expectations).

  • 16 March +2.2% (in-line)

  • 4 May +3.0% (in-line)

  • 15 June +1.5% (75 bps vs. 50 bps est)

  • 27 July +2.6% (in-line)

  • 21 September -0.83% (in-line)

Index charts

S&P/ASX 200: A cautious close above the 200-day. The 50-day moving average (green) is beginning to slope upward as the trend improves. Let's see how we hold up.

XJO chart
XJO chart (Source: TradingView)

S&P/ASX 200 Energy: Highest close since January 2020 as Woodside rallies to a fresh four year high.

XEJ chart
XEJ weekly chart (Source: TradingView)

Major announcements

Large caps (>$1bn)

  • Lake Resource (ASX: LKE) +5.2% said it's Kachi project lithium processing demo plant is now processing brines and expects to ship lithium chloride for conversion to lithium carbonate “within two weeks”

  • Goodman Group (ASX: GMG) -3.1% forecasted 11% EPS growth in FY23 and said “tight supply conditions remain in our markets and we continue to see strong growth in rents”   

  • Amcor (ASX: AMC) -4.3% lowered its FY23 EPS guidance to 77-81 cps mostly due to a strong US dollar. FY22 adjusted EPS was 80.5 cps 

Mid-to-small caps

  • Atlantic Lithium (ASX: A11) +34.0% posted ongoing high-grade drill intersections at its Ewoyaa Lithium Project in Ghana  

  • Strandline Resources (ASX: STA) +2.5% processed its first ore at its Coburn mineral sands project in WA and on track for first shipment of heavy mineral concentrate for 4Q22

  • Galan Lithium (ASX: GLN) +1.9% submitted an application to scale up the piloting stage of its Hombre Muerto West Project to 4ktpa of lithium carbonate 

  • Anson Resources (ASX: ASN) +1.6% announced a major upgrade to its JORC mineral resource at its Paradox Lithium Project to 1.04m tonnes of lithium carbonate equivalent and 5.3m tonnes of bromine  

  • 5E Advanced Materials (ASX: 5EA) +0.95% reaffirmed the targeted completion of its small-scale boron facility for 4Q22 

  • Australian Strategic Metals (ASX: ASM) -8.6% successfully raised $30m at $1.73 per share, a 12.4% discount to its last closing price  


Broker updates 

Ticker

Company

Broker

Rating

Target price

CRN

Coronado Global

Morgans

Add

$2.40 from $2.24

GMA

Genworth Mortgage Insurance

Macquarie

Underperform

$2.35 from $2.20

IGO

IGO

Morgans

Buy

$15.70


Scans

Top Gainers

Code Company Last % Chg
WR1 Winsome Resources... $0.815 +56.73%
FDR Finder Energy Hol... $0.14 +40.00%
A11 Atlantic Lithium Ltd $0.935 +32.62%
RCR Rincon Resources Ltd $0.145 +26.09%
MRL Mayur Resources Ltd $0.195 +25.81%
View all top gainers

Top Fallers

Code Company Last % Chg
TTA TTA Holdings Ltd $0.015 -46.43%
HIQ HITIQ Ltd $0.032 -21.95%
RBD Restaurant Brands... $8.74 -18.92%
CL8 Carly Holdings Ltd $0.025 -16.67%
SHG Singular Health G... $0.105 -16.00%
View all top fallers

52 Week Highs

Code Company Last % Chg
WR1 Winsome Resources... $0.815 +56.73%
A11 Atlantic Lithium Ltd $0.94 +33.33%
OLH Oldfields Holding... $0.076 +16.92%
PBL Parabellum Resour... $0.505 +12.22%
C1X Cosmos Exploratio... $0.15 +7.14%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
TTA TTA Holdings Ltd $0.015 -46.43%
HIQ HITIQ Ltd $0.032 -21.95%
RBD Restaurant Brands... $8.74 -18.92%
SIX Sprintex Ltd $0.02 -14.89%
CLZ Classic Minerals Ltd $0.012 -14.29%
View all 52 week lows

Near Highs

Code Company Last % Chg
IJP Ishares MSCI Japa... $78.94 +1.02%
LOV Lovisa Holdings Ltd $24.83 +0.24%
YTMIP1 Equity Trustees Ltd $97.79 +0.17%
NABPE National Australi... $100.90 0.00%
TNE Technology One Ltd $12.15 -1.54%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
QPON Betashares Austra... $25.50 0.00%
GSS Genetic Signature... $0.665 +5.56%
CDA Codan Ltd $3.955 -1.86%
PAXX Platinum Asia Fun... $3.59 +3.46%
FEX FENIX Resources Ltd $0.205 -2.38%
View all RSI oversold

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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