Evening Wrap: ASX 200 eases from all-time highs, Coles and Woolworths dip, Uranium stocks soar

The ASX 200 took a breather from all-time highs, Woolworths and Coles shares tumble as the ACCC takes legal action over false or misleading representations to consumers about prices, Australia's manufacturing sector is in deep pain and uranium stocks soared after the Constellation-Microsoft nuclear deal.

Let's dive in.

ASX 200 Session Chart

ASX 200 finished lower but off worst levels (Source: Market Index)

Markets

• ASX 200 snaps an eight day winning streak, undercutting the 8,200 level

• Sector performance was very mixed due to several conflicting economic, market and stock-specific catalysts

• Staples was the worst performing sector after the ACCC said it would seek a "significant penalty" from Coles and Woolworths over allegations they breached Australian Consumer Law by misleading consumers through discount pricing claims on hundreds of common supermarket products – Both stocks finished the session around 3% lower

• Real estate stocks struggled as yields on longer-term bond yields have ticked higher since the Fed's 50 bp rate cut last week – The yield on the Australian 10-year bond is ticked higher for five straight sessions from 3.8% to 3.975% – Higher yields tend to weigh on real estate valuations

• S&P/ASX 200 Real Estate Index has eased around 1.8% in the last two sessions but still up around 6% this month and up 21% year-to-date

• Outperformers include i) Energy, largely driven by an uptick in oil prices; ii) Utilities, largely driven by strength across Origin (+1.0%) and AGL Energy (+1.4%) and iii) Technology, carried by gains from Wisetech (+0.5%), NextDC (+1.9%)

Economy

Australia's manufacturing PMI hit a four-year low of 46.7 (Aug: 48.5) while services PMI eased to a two-month low of 50.6 (Aug: 52.5), according to Judo Bank.

• Rate of services activity growth moderated alongside new business

• Services price pressures eased with the rates of input costs and output price inflation falling to the lowest in three and 45 months respectively

• Manufacturing PMI indicated that the health of the sector deteriorated for an eighth straight month and at the fastest pace since May 2020

• New orders and production fell at the fastest pace in 52 months, underpinned by softening demand conditions

• Australian manufacturers cut back on their purchases, reduced inventories while headcounts declined for a fourth straight on the amid lack of pressure on capacity

Latest News

Interesting Movers

Trading higher:

• +78.3% Mithril Silver and Gold (MTH) – Continuation run after 144 g/t gold and 1,162 g/t silver hit from last Friday

• +18.7% Appen (APX) – No news but 20-day average volumes have surged to ~14 million vs. 1.7m in July

• +7.4% Healius (HLS) – Sold its imaging business for $965m, company will be in a net cash position for the first time in over a decade

• +2.5% Atlas Arteria (ALX) – Macquarie upgrade

• +2.3% Whitehaven Coal (WHC) – Launching joint appeal to overturn a Fairwork Commission decision compelling the companies into multi-employer bargaining

• Uranium miners – Bannerman (+11.7%), Boss Energy (+8.2%), Alligator Energy (+7.3%), Peninsula Energy (+5.8%), Deep Yellow (+5.1%), Lotus Resources (+4.3%)

Trading lower:

• -18.8% Select Harvests (SHV) – Completes $80m raise at 15.6% discount, proceeds to fund near-term organic growth opportunities to improve the product capacity of core horticultural assets

• -11.3% Strike Energy (STX) – Completes review of Walyering and ASX 200 removal

• -10.7% Webjet (WEB) – Demerged entity commences trading

• - 3.4% Woolworths (WOW) – ACCC commences legal proceedings

• -3.2% Coles (COL) – ACCC commences legal proceedings

• -2.8% Myer (MYR) – Follow-through selling pressure from last Friday's earnings

Broker Notes

• Auckland International Airport (AIA) retained at buy at Citi; Price Target: NZ$8.70

• Atlas Arteria (ALX) upgraded to outperform from neutral at Macquarie; Price Target: $5.26 from $5.10

• ANZ Group (ANZ) retained at underperform at Macquarie; Price Target: $26.50

• Australian Vanadium (AVL) retained at buy at Shaw and Partners; Price Target: $0.08

• Bowen Coking Coal (BCB) retained at buy at Shaw and Partners; Price Target: $0.05

• Bellevue Gold (BGL) retained at buy at Goldman Sachs; Price Target: $1.70

• Beach Energy (BPT) retained at buy at Bell Potter; Price Target: $1.40

• Commonwealth Bank of Australia (CBA) retained at underperform at Macquarie; Price Target: $95.00

• Capricorn Metals (CMM) retained at neutral at Goldman Sachs; Price Target: $5.55

• Core Lithium (CXO) retained at neutral at Goldman Sachs; Price Target: $0.08

• De Grey Mining (DEG) retained at buy at Goldman Sachs; Price Target: $1.40

• Evolution Mining (EVN)

  • Downgraded to buy from buy at Bank of America; Price Target: $4.50 from $4.10

  • Retained at buy at Goldman Sachs; Price Target: $4.05

• Fletcher Building (FBU) retained at underweight at Macquarie; Price Target: NS$2.37 from NS$2.21

• Gold Road Resources (GOR) retained at buy at Goldman Sachs; Price Target: $2.05

• IGO (IGO) retained at buy at Goldman Sachs; Price Target: $6.35

• Judo Capital (JDO) retained at sell at Citi; Price Target: $1.35

• Johns Lyng Group (JLG) retained at neutral at Citi; Price Target: $4.55

• Lotus Resources (LOT)

  • Retained at buy at Bell Potter; Price Target: $0.50 from $0.70

  • Initiated at outperform at Macquarie; Price Target: $0.40

• Arcadium Lithium (LTM)

  • Retained at buy at Bell Potter; Price Target: $6.25 from $7.25

  • Retained at buy at Citi; Price Target: $6.50

  • Retained at neutral at Goldman Sachs; Price Target: $5.60

• Liontown Resources (LTR) retained at neutral at Goldman Sachs; Price Target: $1.15

• Mineral Resources (MIN)

  • Retained at buy at Bell Potter; Price Target: $66.00

  • Retained at neutral at Goldman Sachs; Price Target: $43.00

  • Retained at underperform at Macquarie; Price Target: $32.50

• Northern Star Resources (NST) retained at neutral at Goldman Sachs; Price Target: $13.70

• Opthea (OPT) retained at buy at Bell Potter; Price Target: $1.30 from $0.70

• REA Group (REA) retained at buy at Citi; Price Target: $230.00

• Regis Healthcare (REG)

  • Retained at buy at Jefferies; Price Target: $7.00 from $6.75

  • Retained at overweight at JP Morgan; Price Target: $6.90

  • Retained at outperform at Macquarie; Price Target: $5.50

  • Retained at outperform at RBC Capital Markets; Price Target: $7.50

• Regis Resources (RRL)

  • Downgraded to buy from buy at Bank of America; Price Target: $2.00

  • Retained at neutral at Goldman Sachs; Price Target: $1.85

• Select Harvests (SHV) downgraded to hold from buy at Ord Minnett; Price Target: $4.35 from $5.15

• Strike Energy (STX)

  • Retained at buy at Bell Potter; Price Target: $0.32

  • Retained at buy at Goldman Sachs; Price Target: $0.28 from $0.27

• Seven West Media (SWM) retained at underweight at Morgan Stanley; Price Target: $0.16 from $0.22

• Westpac Banking Corporation (WBC) retained at underperform at Macquarie; Price Target: $26.00

• Westgold Resources (WGX) upgraded to buy from hold at Euroz Hartleys; Price Target: $2.85 from $2.20

Scans