Evening Wrap: ASX 200 falls, gold stocks tumble, Woodside trades ex-dividend

The market didn't stand a chance against Powell's hawkish remarks, Energy stocks take a hit as Woodside pays out a $2.11 final dividend, the US Dollar Index hits a three month high and Macquarie's broker notes for Wednesday.

Let's dive in.

ASX 200 Session Chart

The ASX 200 tumbled on Powell's hawkish comments (Source: TradingView)

Markets

Can't catch a moment's break can we? The ASX 200 is on the backfoot again as Powell's hawkish testimony reverberates across equity markets. The likelihood of a 6% upper bound rate at the July FOMC meeting has now jumped to 32%.

• Energy led to the downside but mostly due to Woodside (-7.2%) trading ex-dividend

• Materials faced broad-based pressure after the US Dollar Index jumped 1.3% overnight to a three month high

• Healthcare was a sector of strength with gains from heavyweights CSL (+0.1%), Sonic Healthcare (+1.7%) and Cochlear (+1.1%)

Economy

No major economic news. We have another round of Powell tonight at 2:00 am.

Latest news

Market Insights

Thinking Technicals: ASX 200

We're back to playing this game where the market is trying to find a floor while yields are trying to find a ceiling.

Traders dramatically raised their bets for a 50 bp hike in March after Powell's comments, with money market futures pricing in a more than 65% likelihood, up from 31% on Monday, according to CME Group's FedWatch tool.

The ASX 200 is in a more comfortable position relative to the US market. We managed to defend the key trendline and sit above the 200-day moving average. We also managed to find some genuine buying in the days that followed the panic-driven selloff on Monday, 27 February.

That said, it's pretty hard to be optimistic amid such an aggressive repricing of Fed futures and bond yields. Let's see if the market can find some support around these levels over the next few sessions.

ASX 200 chart (Source: TradingView)

Interesting news and movers

Trading higher

• +14.1% Mesoblast (MSB) – Acceptance re-submission for remestemcel-L

• +6.0% Weebit Nano (WBT) 

• +4.6% BetMakers Technology (BET) – Continuation rally, up 13% in last three

Trading lower

• -15.2% Nuix (NXL) – Former CEO appeals Federal Court decision

• -10.8% Terracom (TER) – Ex-dividend

• -7.2% Woodside Energy (WDS) – Ex-dividend

• -4.7% Ventia Services (VNT) – 93 million share block sale

• -4.5% 29Metals (29M) – Rainfall impact

• -3.5% Core Lithium (CXO) – Downgraded at Citi

• Coal sector move: Whitehaven Coal (-3.8%), New Hope (-2.5%), Coronado Global (-1.6%)

• Gold sector move: Ramelius Resources (-10.9%), Perseus Mining (-4.7%), Evolution Mining (-4.2%), Newcrest Mining (-3.3%) and Northern Star (-2.8%)

Broker updates

A few standalone Macquarie notes: 

Atlantic Lithium (A11): Outperform with $0.80 target price

• “Exploration drilling completed to date by A11 has focused on just 13km2 of its total 560km2 tenement package. We believe there is potential to add to the current resource base given the number of near-mine exploration targets, and see upside risk to our 13-year project life.”

Leo Lithium (LLL): Outperform with $1.35 target price

• “Given the recent upgrades to the resource base, we expect LLL will look to expand the overall site capacity to ~5mtpa, which should lift the ultimate spodumene production rate to +900 ktpa, with a peak of 950kt in CY29.”

Megaport (MP1): Neutral with $5.00 target price

• “We expect the group will likely enter a period of heightened strategic and operational uncertainty.”

McMillan Shakespeare (MMS): Neutral with $14.78 target price 

• “Earnings should be supported as supply constraints ease and pipelines clear. Timing remains uncertain.”

• “MMS needs to cycle normalisation of used car prices, as well as a shift in funding mix, with cost pressure across the sector.”

• Downgrade to neutral as risks are viewed as balanced after the stock rallied 12% year-to-date 

Panoramic Resources (PAN): Outperform with $0.20 target price

• “Today’s results from PAN were positive with infill drilling underpinning the next phase of production development at Savannah North.”

• “PAN trades on a FY24 EV/Ebitda multiple of 4.3x and FCF yield of 15%, and in a spot price scenario this improves to 2.2x and 31%, respectively.”

Sayona Mining (SYA): Outperform with $0.30 target price

• “SYA, through its 75% interest in Sayona Québec is set to become Canada’s only spodumene producer in the next few months.”

• “We believe SYA has the capacity to move downstream and accelerate the Moblan project to add value.”

Santos (STO): Outperform with $10.00 target price

• Papua LNG project has moved into FEED and is targeting first LNG by 2027-28. This is viewed as another “key plank of STO’s growth strategy” 

Scans