Market Wraps

Evening Wrap: ASX 200 closes flat, CBA shares bounce, lithium stocks smashed

Mon 20 Feb 23, 5:05pm (AEST)

The S&P/ASX 200 closed 5 points higher, up 0.06%.

The market is trying to find its footing after a volatile week, the big four banks finally bounce after three consecutive days of selling, lithium stocks sell off sharply and Citi's take on today's results.

Let's dive in.


Today in Review

Mon 20 Feb 23, 4:29pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,351.5 +0.06%
All Ords 7,552.5 +0.00%
Small Ords 2,872.2 -0.89%
All Tech 2,183.6 -0.66%
Emerging Companies 2,164.2 -0.79%
Currency
AUD/USD 0.6889 +0.16%
US Futures
S&P 500 4,085.25 -0.06%
Dow Jones 33,852.0 -0.04%
Nasdaq 12,387.5 -0.02%
Name Value % Chg
Sector
Financials 6,517.0 +0.95%
Consumer Staples 13,395.4 +0.09%
Industrials 6,588.3 +0.06%
Materials 18,630.0 -0.03%
Health Care 43,124.0 -0.22%
Consumer Discretionary 3,028.1 -0.35%
Information Technology 1,468.1 -0.42%
Communication Services 1,511.4 -0.47%
Utilities 7,812.8 -0.59%
Real Estate 3,200.0 -0.95%
Energy 10,634.6 -0.97%

Enjoying the Evening Wrap? Sign up to get it sent directly to your inbox after every trading day.

ASX 200 Session Chart

AUS200
Choppy session but the ASX 200 managed to settle around breakeven (Source: TradingView)

Markets

Banks helped offset declines from almost every other sector. The market remains rather heavy as the session was just one heavyweight and oversold sector offsetting from the others. The ASX 200 remains in a volatile state, trying to stabilise after a volatile week where it fell 0.96%.

  • Financials bounced after the sector fell -4.3% last week. Most of the big four banks bounced around ~1%

  • Energy led to the downside after oil prices fell -1.9% last Friday, down for a fifth consecutive session

  • Yield sensitive sectors including Real Estate, Utilities and Telcos were under pressure. The Australian 2-year yield has hit levels not seen since last October

Economy

No major economic announcements. This to look out for this week include:

  • Tuesday: RBA Meeting Minutes

  • Thursday: FOMC Minutes


Latest news


Market Insights

ASX 200: Still heavy

The market remains in a heavy state. Banks are bouncing from a rather oversold state, if not for them, the market would've been red.

We're seeing some of the bearish talking points begin to matter such as rising bond yields, repricing of peak interest rates for central banks, bullish sentiment beginning to fade and short-covering coming to an end (Goldman Sachs notes a 12-day short-covering period earlier this month which was the second largest in the past decade).

Now represents a lull period where the dust is trying to settle, but the question is where?

From a technical perspective, can the market catch a bid around the 50-day? However, as the 20-day begins to turn negative, does it become one of those instances where it struggles to reclaim the 20 and rides it all the way down?

XJO chart
XJO chart (Source: TradingView)

Nice narrative, ugly chart

Much loved sectors like lithium and uranium are getting absolutely punched in the face.

A bellwether name for lithium like Pilbara Minerals has been trying to hold this key $4.74 level. But broke down rather aggressively.

pls CHART
Pilbara Minerals price chart (Source: TradingView)

Interesting news and movers

Trading higher

  • +11.7% Inghams (ING) – Upgraded by several brokers

  • +7.9% Weebit Nano (WBT)

  • +7.8% Talga Group (TLG)

  • +5.5% Ridley Corp (RIC) – Continuation rally, up more than 14% in last three

  • +3.4% Kelsian Group (KLS) – Sydney bus contract award

  • +1.9% De Grey Mining (DEG) – The Australian notes takeover speculation

Trading lower 

  • -18.1 CogState (CGS) – Major shareholder selldown

  • -13.95% Piedmont Lithium (PLL) – LC Chem investment and offtake

  • -11.6% NIB Holdings (NHF) – Reports 1H earnings

  • -10% BlueScope Steel (BSL) – Reports 1H earnings

  • -6.1% Charter Hall (CHC) – Reports 1H earnings

  • -5.4% Pilbara Minerals (PLS) – Spot sale pricing

  • -5.6% Macmahon Holdings (MAH) – Reports 1H earnings

  • -5.5% GWA Group (GWA) – Reports 1H earnings

  • Lithium sector move: Argosy (-6.2%), Leo Lithium (-6.1%), Core Lithium (-4.2%), Liontown (-4.1%), Allkem (-3.4%)

  • Uranium sector move: Paladin Energy (-5.9%), Boss Energy (-5.6%), Deep Yellow (-3.5%)


Broker updates 

Citi's take on today's results:

A2 Milk (A2M): Sell rated with $4.51 target price

  • Result was broadly in-line or better-than-expected, notably infant formula sales growth (+18%), strong China brand health metrics and improved US segment losses

  • Valuation came into question, now trading at 39x FY23 PE. Citi also flagged a potential write off for A2 inventory ahead of the SAMR registration deadline

Charter Hall Group (CHC): Buy with $14.50 target price

  • EPS came in 11% ahead of Citi expectations (50.7 cents vs. 45.7 cents). Though, FY23 EPS guidance at "no less than 90 cents" implies a -24% decline in the second-half vs. the first half

  • "The stock has had a strong run coming in to today’s result, so we expect a negative reaction to the guidance being left unchanged."

BlueScope Steel (BSL): Buy with $19.50 target price

  • "North Star ramp-up going well; expectations continue to be that the full ramp-up will progress over an 18-month period from August 2022."

  • "Group underlying EBIT in 2H FY23 is expected to be in the range of $480m-$550m. This is lower than 1H FY23 mainly due to softer Asian and Midwest steel spreads."

GPT Group (GPT): Buy with$4.90 target price

  • FY22 FFO was slightly below consensus expectations, office valuation reduced by 5%

  • "FY23 FFO guidance of 31.3cps is slightly ahead of consensus of 30.9cps. Given the relatively cheap valuation we expect the share price likely to remain relatively supported today to the rest of the sector."


Scans

Top Gainers

Code Company Last % Chg
ECG Ecargo Holdings Ltd $0.065 +85.71%
BLG Bluglass Ltd $0.077 +42.59%
EX1 Exopharm Ltd $0.017 +21.43%
NGS Nutritional Growt... $0.03 +20.00%
CCA Change Financial Ltd $0.065 +18.18%
View all top gainers

Top Fallers

Code Company Last % Chg
BMO Bastion Minerals Ltd $0.036 -30.77%
PXX Polarx Ltd $0.014 -30.00%
LAW Lawfinance Ltd $0.025 -28.57%
ARV Artemis Resources... $0.018 -21.74%
BME Black Mountain En... $0.032 -20.00%
View all top fallers

52 Week Highs

Code Company Last % Chg
ECG Ecargo Holdings Ltd $0.065 +85.71%
BLG Bluglass Ltd $0.077 +42.59%
TLG Talga Group Ltd $1.87 +7.78%
HZN Horizon Oil Ltd $0.17 +6.25%
RIC Ridley Corporatio... $2.32 +5.94%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
LAW Lawfinance Ltd $0.025 -28.57%
ARV Artemis Resources... $0.018 -21.74%
ADA Adacel Technologi... $0.635 -18.07%
SQX SQX Resources Ltd $0.165 -17.50%
NME NEX Metals Explor... $0.017 -15.00%
View all 52 week lows

Near Highs

Code Company Last % Chg
SMLL Betashares Aust S... $3.49 -0.29%
OZBD Betashares Austra... $43.98 +0.16%
AN3PI Australia and New... $102.65 +0.32%
PCI Perpetual Credit ... $1.00 -0.50%
WVOL Ishares Edge MSCI... $34.65 +0.12%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
EGG Enero Group Ltd $2.16 -6.09%
CMM Capricorn Metals Ltd $3.945 +0.64%
PPK PPK Group Ltd $1.12 +1.82%
JRV Jervois Global Ltd $0.198 -3.66%
SVL Silver Mines Ltd $0.153 -1.61%
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.

Get the latest news and insights direct to your inbox

Subscribe free

Get free post-market insights with our Evening Wrap

Create an account to receive our concise, data-driven post-market recap, sent directly to your inbox, every day.

Along with the Evening Wrap, you'll join 100k+ investors who receive our Morning Wrap and Weekend Newsletter.