Market Wraps

Evening Wrap: ASX 200 fades from session highs, Australia inflation hits 32-year high, Coles tanks

Wed 26 Oct 22, 5:03pm (AEST)

The S&P/ASX 200 closed 12 points higher, up 0.18%.

The local sharemarket continues to sell off from session highs, Australia inflation accelerated in September, Medibank doesn't have cyber insurance and another massive night for US corporate earnings.

Let's dive in.


Today in Review

Wed 26 Oct 22, 4:22pm (AEST)

Name Value % Chg
Major Indices
ASX 200 6,810.9 +0.18%
All Ords 7,005.1 +0.16%
Small Ords 2,752.1 +0.56%
All Tech 2,048.0 +0.10%
Emerging Companies 2,091.6 -0.04%
Currency
AUD/USD 0.6398 +0.09%
US Futures
S&P 500 3,833.0 -0.96%
Dow Jones 31,788.0 -0.28%
Nasdaq 11,479.25 -2.00%
Name Value % Chg
Sector
Real Estate 2,937.3 +2.48%
Utilities 6,854.9 +2.41%
Industrials 6,070.2 +0.90%
Consumer Discretionary 2,795.9 +0.54%
Communication Services 1,397.4 +0.40%
Health Care 40,338.2 +0.28%
Materials 15,590.1 +0.28%
Financials 6,428.3 +0.06%
Information Technology 1,432.6 -0.01%
Energy 11,057.3 -1.36%
Consumer Staples 12,068.7 -2.39%

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Markets

The ASX 200 closes green for a third consecutive day but struggling to close towards session highs. Equities were under pressure after local inflation came in hotter-than-expected, up 1.8% quarter-on-quarter and up 7.3% annually. The higher for longer inflation narrative means that the RBA might have to U-turn its dovish views and keep on hiking.

  • Yield sensitive sectors like Real Estate and Utilities led to the upside

  • Energy underperformed benchmarks as oil prices eased, currently on a three day skid

  • Staples tumbled after Coles shares sold off after their September quarter earnings

  • 66% of the top 200 advanced

Economy

  • Australia inflation accelerated to 7.3% in the September quarter from 6.1% in the June quarter

    • Ahead of consensus expectations of 7.0%

    • “The most significant contributors to the rise in the September quarter were new dwellings (+3.7 per cent), gas (+10.9 per cent) and furniture (+6.6 per cent),” noted the ABS

    • "Labour shortages in the house construction industry, leading to rises in labour costs, contributed to the rise in new dwellings this quarter. The continuation of material shortages added further price pressure,” said Michelle Marquardt, Program Manager of Prices at the ABS

    • "Annual gas price reviews across the states and territories saw higher wholesale gas prices passed on to consumers in the September quarter. Electricity rose 3.2 per cent this quarter.”

Commodities 

"Sentiment remained weak in commodity markets as concerns over Chinese growth remain elevated. This was offset somewhat by a weaker USD, which helped support investor demand," said Daniel Hynes, Senior Commodity Strategist.

  • Iron ore futures on China's Dalian Commodity Exchange rose 1.2%


Latest news


Post market brief

The market continues to stall around the upper levels of its recent trading range. In the past three days, the ASX 200 has experienced strong buying at the open and pushes towards a one month high. But by close, those gains fizzle and we finish well off session highs.

Its a rather awkward feeling. Did the market close green? Yes. But sellers seem to take control and push it lower after open.

This dynamic reflects the choppy market we're in. Just look over at how lithium names and how aggressively they were sold off in the afternoon.

Expect another earnings driven session on Wall St. Microsoft and Alphabet shares both fell more than -6% after hours, which could weigh on both the S&P 500 and Nasdaq.

Index charts

S&P/ASX 200: Nothing really happened so I can copy and paste yesterday's stuff.

"Remains rangebound between the ~6,820 high and ~6,635 low."

XJO chart
XJO chart (Source: TradingView)

Major announcements

Tons of announcements today. Separating them by large caps (>$1bn market cap) and other.

Large caps

  • Costa (ASX: CGC) +10.8% notes that PE firm Paine Schwartz has obtained a 13.78% interest in the company

  • Mineral Resources (ASX: MIN) +2.9% posted its September quarter results. Mining services volumes were up 8% QoQ, iron ore shipments fell -3% QoQ to 4.5m tonnes, lithium production on track to achieve FY23 guidance of 490-540,000 tones spodumene 

  • Fletcher Building (ASX: FBU) +2.75% said the business was running at around 10% below the peak levels reached in December 2021. Reaffirmed FY23 EBIT target  

  • Dexus (ASX: DXS) +2.1% said rent collections remained strong at 98.6% in the September quarter and office portfolio occupancy remained high at 95.6% 

  • Tabcorp (ASX: TAH) +1.0% notes that unaudited revenues are up 18.7% in the first quarter compared to last year 

  • Coles (ASX: COL) -2.65% posted 1.3% revenue growth to $9.89bn for the September quarter

    • CEO: “Despite record levels of hospitality expenditure in Australia, we are pleased that a strengthening sales trajectory is being driven by improved availability, new value campaigns, and the unwind of local shopping as consumer shopping behaviour normalises.”

  • Medibank (ASX: MPL) -18.1% resumed trading after a week long suspension. The company said it does not have cyber insurance and expects $25-35m in pre-tax costs for 1H23  

Other

  • Elmo Software (ASX: ELO) +40.3% urged shareholders to accept the $4.85 cash per share takeover offer from K1 Investment Management  

  • Australian Strategic Metals (ASX: ASM) +15% produced 6.5t of saleable NdPr metal and expects its plant to finish commissioning by the end of this year

  • Westgold Resources (ASX: WGX) +8.0% posted ‘bonanza-grade’ drill results from its Consol Lode project in WA. Intersections recorded 15.77m at 47.22g/t for gold  

  • Kogan (ASX: KGN) +6.4% accelerated the sell-through of excess inventory in the September quarter, down to $132.1m from FY21 highs of $227.9m

  • Ramelius (ASX: RMS) +4.8% produced 61,244 ounces of gold in the September quarter, in-line with expectations. FY23 guidance reaffirmed

  • Paradigm (ASX: PAR) +0.8% dosed its first patient to evaluate its PARA_OA_002 candidate used to treat pain associated with knee osteoarthritis 

  • Mt Gibson Iron (ASX: MGX) -2.6% reaffirmed its FY23 sales guidance of 3.2 to 3.7m tonnes of high grade iron ore and cost guidance of $70-75 a tonne

  • Global Lithium (ASX: GL1) -7.3% successfully raised $111.4m at $2.25 per share, a 13.8% discount to its last price 

  • Codan (ASX: CDA) -20.7% notes that Sudan, its largest market in Africa, has been materially impacted by a military coup 


Broker updates 

Ticker

Company

Broker

Rating

Target Price

ALD

Ampol

Credit Suisse

Outperform from Neutral

$30.49 from $31.93

CCP

Credit Corp

Ord Minnett

Buy from accumulate

$28.00 from $28.50

CMM

Capricorn Metals

Macquarie

Neutral from Outperform

$3.50 from $3.30

COL

Coles

Ord Minnett

Hold from Lighten

$16.0 from $15.80

PLS

Pilbara Minerals

Ord Minnett

Lighten from Hold

$4.60 from $3.60

PBH

PointsBet

Ord Minnett

Hold

$2.20 from $2.80

RWC

Reliance Worldwide

Morgans

Hold

$3.17 from $4.42

WOW

Woolworths

Ord Minnett

Lighten

$32.20 from $34.0


Scans

Top Gainers

Code Company Last % Chg
WA1 WA1 Resources Ltd $0.66 +388.89%
JXT Jaxsta Ltd $0.036 +63.64%
ERG Eneco Refresh Ltd $0.023 +43.75%
ELO Elmo Software Ltd $4.64 +40.61%
X2M X2M Connect Ltd $0.10 +25.00%
View all top gainers

Top Fallers

Code Company Last % Chg
W2V Way 2 Vat Ltd $0.026 -27.78%
SPA Spacetalk Ltd $0.037 -24.49%
IKW Ikwezi Mining Ltd $0.45 -24.37%
C29 C29 Metals Ltd $0.22 -24.14%
WSP Whispir Ltd $0.605 -22.44%
View all top fallers

52 Week Highs

Code Company Last % Chg
WA1 WA1 Resources Ltd $0.66 +388.89%
LGI LGI Ltd $2.10 +10.53%
ATL Apollo Tourism & ... $0.955 +3.80%
CY5 CYGNUS Gold Ltd $0.555 +3.74%
XCO2 Vaneck Global Car... $21.25 +3.06%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
SPA Spacetalk Ltd $0.037 -24.49%
IKW Ikwezi Mining Ltd $0.45 -24.37%
WSP Whispir Ltd $0.605 -22.44%
CDA Codan Ltd $3.93 -19.47%
MPL Medibank Private Ltd $2.89 -17.55%
View all 52 week lows

Near Highs

Code Company Last % Chg
WVOL Ishares Edge MSCI... $34.66 -0.06%
WBCPI Westpac Banking C... $103.10 -0.07%
HLTH Vaneck Global Hea... $10.45 +0.48%
PMGOLD Gold Corporation $25.84 -0.84%
VVLU Vanguard Global V... $59.44 +0.30%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
SVY Stavely Minerals Ltd $0.13 0.00%
WAX Wam Research Ltd $1.245 +0.40%
DUB Dubber Corporatio... $0.335 +4.69%
RAD Radiopharm Theran... $0.113 -6.25%
TUL Tulla Resources Plc $0.37 -1.99%
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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