Evening Wrap: ASX 200 falls for fifth straight session, Amazon earnings in focus

The local sharemarket is down 1.0% in the last five sessions, the Materials sector bounce after falling for four straight sessions, Blackmores receives a takeover bid from Japanese beer giant Kirin and US earnings continues, with Mastercard, Amazon and Intel set to report first quarter results.

Let's dive in.

ASX 200 Session Chart

ASX 200 falls in early trade and chops around session lows (Source: Market Index)

Markets

It was a rather uneventful and choppy session that was largely dictated by the US markets and their earnings. The outperformance of a few defensive sectors and a small bounce for resources was offset by heavier declines across the others. The ASX 200 fell for a fifth straight session but we've yet to see a panic heavy session. That said, US earnings season continues, so let's see how things hold up overnight.

• Materials bounce after a 4-day losing streak as iron ore futures begin to stabilise around US$105 a tonne

• Industrials ease after rallying to levels not seen since February 2020 on Wednesday

• Discretionary was also hovering 1-year highs and pulled back sharply

Economy

No major economic announcements.

Latest News

Market Insights

More US earnings

US earnings season has largely been better-than-feared but not enough to relieve fears about a hard-landing and US banking crisis fears.

72 S&P 500 companies report tonight, some of the more notable ones include:

• Before markets open: Mastercard, CAT, American Airlines, Hertz, Domino's Pizza

• After markets close: Amazon, Intel, Snap, T-Mobile and Snap

The seasonally strong month of April has enjoyed low volatility. But the VIX futures curve suggest higher volatility ahead.

Source: vixcentral.com

Interesting news and movers

Trading higher

• +25.4% Symbio (SYM) – Trading update

• +22.75% Blackmores (BKL) – Kirin takeover

• +12.5% Retail Food (RFG) – Trading update

• +9.7% Helloworld (HLO) – Earnings

• +7.3% BlueBet (BBT) – Earnings

• +4.2% Allkem (AKE) – Takeover speculation via The Australian

• +1.9% Hipages (HPG) – Earnings

• +0.8% Viva Leisure (VVA) – Earnings

Trading lower

• -40.0% Tigers Realm Coal (TIG) – Potential privatisation of company

• -10.0% Alcidion (ALC) – Earnings

• -9.5% Syrah Resources (SYR) – Q1 production and DFS

• -6.1% Adbri (ABC) – Trading update

Broker updates

Macquarie notes:

A2 Milk (A2M): Underperform with $4.65 target price

• “A2M continues to see modest EBITDA downgrades for FY23, and downside risks to cons. are increasing for FY24.”

• “A2M remains on elevated multiples given China IF backdrop, slower revenue growth and current margin profile, when compared to pre-COVID and against key China IF comparables.”

Viva Energy (VEA): Outperform with $3.60 target price

• “Whilst VEA continues to perform strongly in Commercial & Retail, we note Refining margins are the largest swing factor for earnings – and these margins have been falling in April.”

• “Outperform – A very respectable result but unlikely to be replicated in 2Q. We highlight our relative preference currently for ALD.”

Goldman Sachs notes:

BlueScope Steel (BSL): Buy with $23.50 target price

• “We rate BSL a Buy due to: (1) US & East Asia steel prices bottomed and increasing, (2) Compelling valuation and FCF, (3) Painted steel & comp analysis implies BSL undervalued.”

Morgan Stanley notes:

Mineral Resources (MIN): Equal-weight with $81.90 target price

• “Mt Marion and Wodgina production 14% and 6%, respectively, below MSe offset by ~9% stronger prices at Mt Marion.”

• “Mt Marion costs for FY23 increased 40% and ramp-up is delayed to FY24 (now in-line with MSe) while mining services volumes were downgraded 9%.”

• “The 3QFY23 result was weak, with multiple guidance downgrades leading to significant EPS cuts.”

• “Cost pressures remain a pertinent risk and MIN's tolling arrangements are increasingly under pressure.”

• “MIN's sensitivity to currently volatile commodity prices is also a concern for us. Thus, we have increased our bear case weight and reined in our price target.”

Scans