Market Wraps

Evening Wrap: ASX 200 extends gains, resources rally, risk sectors showing extreme strength

Fri 14 Jul 23, 4:53pm (AEST)

The S&P/ASX 200 closed 56 points higher, up 0.78%. 

The Index extends its win streak to four and finishes the week up 3.7% led by Resources and Tech, Morgan Stanley gives its take on Australian Utilities companies like AGL and Origin Energy, a few standalone Macquarie notes and buckle up for US earnings season.

Let's dive in.


Today in Review

Fri 14 Jul 23, 4:17pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,303.1 +0.78%
All Ords 7,517.1 +0.83%
Small Ords 2,903.4 +1.03%
All Tech 2,508.6 +1.79%
Emerging Companies 2,167.3 +1.27%
Currency
AUD/USD 0.689 +0.02%
US Futures
S&P 500 $4,542.0 -0.03%
Dow Jones $34,535.0 -0.16%
Nasdaq $15,723.5 +0.08%
Name Value % Chg
Sector
Information Technology 1,871.9 +1.68%
Communication Services 1,570.0 +1.66%
Materials 18,563.9 +1.35%
Energy 11,264.4 +1.29%
Utilities 8,956.1 +0.87%
Real Estate 3,151.5 +0.79%
Financials 6,295.0 +0.68%
Consumer Discretionary 2,981.3 +0.59%
Industrials 6,826.8 +0.43%
Consumer Staples 13,201.5 -0.09%
Health Care 39,736.7 -0.58%

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ASX 200 Session Chart

S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
ASX 200 rallies and finishes near session highs (Source: Market Index)

Markets

The ASX 200 rose for a fourth consecutive session and only ~1.2% away from fresh six month highs. Growth and resources continue to catch a bid while defensive sectors like Healthcare and Staples lag. For the week, Energy, Materials and Tech sectors all rose more than 3.5% while Staples and Healthcare finished -0.4% and -2.1% respectively.

This V-shaped move have investors pondering whether or not the market is getting a little overbought and due for a pullback. At the same time, this was a rather step change week with upbeat factors such as:

  • US dollar breaking down (generally a positive for resources)

  • Growth and risk sectors such as Russell 2000, Ark Innovation ETF and Betashares ATEC demonstrating extreme strength

  • US market showing the highest amount of net new highs since 2020

  • US inflation hitting 3.0% from peaks of 9.1% in June 2022

  • Bond yields also breaking down

There's also increasing calls for more fiscal stimulus in China (another tailwind for resources) as well as upcoming US earnings season, which features a rather low-bar dynamic where S&P 500 EPS are expected to fall 7.2% year-on-year. Let's see how US banks report tonight and whether or not the 'easy' market conditions can continue next week.

Economy

No major economic announcements.


Latest news


Interesting news and movers

Trading higher

  • +19.2% Cobalt Blue (COB)

  • +16.8% Neuren Pharma (NEU) – Acadia Pharma acquisition

  • +11.1% Magnetic Resources (MAU) – Drill results

  • +7.3% Latin Resources (LRS)

  • +4.6% PointsBet (PBH)

  • +2.6% Sandfire Resources (SFR) – Upgraded by JPMorgan

  • Uranium sector move: Alligator Energy (+8.6%), Deep Yellow (+7.5%), Peninsula Energy (+5.9%), Elevate Uranium (+5.0%), Paladin Energy (+4.0%), Boss Energy (+2.6%)

  • Iron ore sector move: Mount Gibson Iron (+5.8%), BHP (+1.8%), Champion Iron (+1.7%), Rio Tinto (+1.6%), Fortescue (+1.4%)

  • Tech sector move: Wisetech Global (+2.4%), Altium (+1.8%), Life360 (+1.8%), Xero (+1.6%), Technology One (+1.6%), NextDC( +1.4%)

Trading lower

  • -9.5% Melbana Energy (MAY) – Drilling update

  • -5.4% Netwealth (NWL) – Downgraded by several brokers

  • -2.7% Delta Lithium (DLI)

  • -1.6% Tyro Payments (TYR) – Major shareholder selldown


Broker notes

Morgan Stanley’s take on Australian Utilities:

  • “Our AlphaWise Retail Electricity Bill series shows average incumbent bill increases of 18-25% YoY including policy support.”

  • Equal-weight rated on AGL after its 39% rise so far this year. 

    • “We are seeing increased inbound investor queries on the stock after several years of very low interest.”

    • “We see upside risk skew to FY24 earnings in view of retail market conditions.”

    • “As before, we'd likely become more constructive on the stock if we could gain conviction on AGL's renewables investment.”

  • Overweight rated on Origin Energy, the stock is up 11% so far this year thanks to its Scheme Implementation Deed with Brookfield

Plus a few standalone Macquarie notes: 

St Barbara (SBM)

  • Rating: Outperform

  • Target price: $0.35 ($0.28 as at 13 July)

  • “We resume coverage of SBM with an Outperform recommendation and a A$0.35/sh target price following the sale of the Leonora assets on June 30, 2023.”

  • “While the outlook remains unclear we see value in the development of Fifteen Mile Stream at Atlantic while any development scenario for Simberi Sulphides would present upside to our base case.”

Viva Energy (VEA)

  • Rating: Outperform

  • Target price: $3.40 ($2.92 as at 13 July)

  • “VEA's 2Q-23 EBITDA (RC) of $67m was 43% below MRE, reflecting larger-than-expected losses from the extended Geelong refinery outage.”

  • “Refinery issues are one-off in 2023, and therefore present a buying opportunity for longer term investors.”

  • “The outage also serves as a reminder of the merits of VEA's strategic shift to a diversified business model (with more non-fuel income from company controlled convenience sites).”


Scans 

Top Gainers

Code Company Last % Chg
1CG One Click Group Ltd $0.016 +77.78%
NOU Noumi Ltd $0.135 +35.00%
CSX Cleanspace Holdin... $0.24 +33.33%
CUF Cufe Ltd $0.018 +28.57%
3DA Amaero Internatio... $0.14 +27.27%
View all top gainers

Top Fallers

Code Company Last % Chg
AWJ Auric Mining Ltd $0.042 -25.00%
HAL Halo Technologies... $0.105 -19.23%
LYK Lykos Metals Ltd $0.08 -19.19%
1AD Adalta Ltd $0.025 -16.67%
AN1 Anagenics Ltd $0.015 -16.67%
View all top fallers

52 Week Highs

Code Company Last % Chg
AVH Avita Medical Inc $5.77 +15.63%
VHT Volpara Health Te... $0.985 +11.93%
CRYP Betashares CRYPTO... $4.20 +11.11%
EVO Embark Early Educ... $0.70 +11.11%
MSB Mesoblast Ltd $1.39 +8.17%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
HAL Halo Technologies... $0.105 -19.23%
AUQ Alara Resources Ltd $0.024 -11.11%
NSM North Stawell Min... $0.08 -9.09%
OLH Oldfields Holding... $0.05 -9.09%
BOA Boadicea Resource... $0.041 -8.89%
View all 52 week lows

Near Highs

Code Company Last % Chg
VHT Volpara Health Te... $0.985 +11.93%
WGX Westgold Resource... $1.74 +0.29%
APE Eagers Automotive... $14.80 -1.27%
NDIA Global X India Ni... $62.72 -2.03%
STO Santos Ltd $7.70 +0.39%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
BCB Bowen Coking Coal... $0.145 0.00%
NXD Nexted Group Ltd $1.185 +1.72%
AVR Anteris Technolog... $19.33 +1.47%
CSL CSL Ltd $260.98 -1.32%
APZ Aspen Group $1.67 0.00%
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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