Evening Wrap: ASX 200 falls, Newcrest soars on takeover bid, RBA rate hike in focus

The S&P/ASX 200 closed 19 points lower, down -0.25%.

The local sharemarket snaps a three-day winning streak, miners and energy stocks outperform but fail to pull the index higher, Newcrest shares surge on unexpected takeover bid, Nick Scali flops its 1H21 earnings and the RBA is set to hike by another 25 bps on Tuesday.

Let's dive in.

ASX 200 Session Chart

The ASX 200 rallied back to breakeven in early trade but failed to hold onto gains, closing near session lows.

Markets

The ASX 200 is starting to turn and the Index would've looked a lot uglier if it weren't for names like Newcrest Mining (+9.3%), BHP (+0.6%), Rio Tinto (+0.9%) and Woodside (+1.2%) .

• Energy is up for a second-straight session after a six-day losing streak

• Materials also higher after Newcrest Mining received a takeover mid from US mining giant Newmont Corp

• Defensive and yield-sensitive sectors led to the downside

Economy

No major economic announcements on Monday.

RBA interest rate decision will take place on Tuesday, 2:30 pm AEDT. Another 25 bps is expected, taking the cash rate to 3.35%. Here's how the ASX 200 performed on rate hike days last year:

Latest news

Post market brief

A few sectors are starting to pull back rather aggressively, including:

• Lithium: Argosy has been a standout performer in the past few weeks but closed -6.0% lower. Pilbara Minerals and Allkem finished -2.5% and -1.0% lower respectively

• Uranium: The sector had a good couple of weeks but now experiencing a rather broad-based pullback. Heavyweights Boss Energy and Paladin fell -5.8% and -4.4% respectively

• Tech: The disappointing US big tech earnings and Nasdaq underperformed weighed on local names. Wisetech and and Xero both closed around 1-2% lower

As we begin to sell volatility pick up and stocks begin to pull back, the question is how does the dust settle? Will buyers pick up over the next few days and support this pullback? Or was this just another one of those bear market rallies from last year?

Interesting news and movers

Trading higher

• +9.3% Newcrest Mining (NCM) – Receives takeover offer from Newmont

• +8.6% Mesoblast (MSB) – Continuation rally; +10% in the last three days

• +3.7% Beach Energy (BPT) – Signs Webuild for Waitsia Stage 2 project

• +2.2% AUB (AUB) – Initiated Buy at UBS

• +1.4% Warrego Energy (WGO) – Hancock receives acceptance

Trading lower 

• -13.0% Nick Scali (NCK) – 1H21 results

• -8.1% Westgold Resources (WGX) – Gold sector selloff

• -5.8% Sayona Mining (SYA) – Downgrade to sell from Hold by Canaccord

• -5.8% Boss Energy (BOE) – Uranium sector weakness

• -5.4% Weebit Nano (WBT) – Pullback after +21% in the prev three sessions

Broker updates 

Wisetech Global: “Volume headwinds”

• Citi: $53.65 target price; Retains Sell

• Notes: Quarterly results from shipping companies including DSV and CH Robinson highlight “continued decline in freight volumes and yields”. Citi notes how weakness in freight volumes is a headwind for the company given its transaction-based pricing but expects this to be offset by global roll-outs and new customer wins.

Macquarie: Consensus too high

• Citi: $172.00 target price; Retains Neutral

• Notes: Commodities revenues expected to remain strong, despite softening gas prices. Deal flow is flagged as “likely to be very weak”, resulting in Macquarie's first negative quarterly comparable since Covid. “We think consensus earnings expectations look too high while the multiple is cheaper than it has been, but not exactly cheap.”

Sandfire: “Valuation upside at spot prices”

• Macquarie: $7.00 target price; Retains Outperform

• Notes: “Sandfire has strong upside to spot prices and in a spot price scenario in FY24 trades on an EV/EBITDA of 3.9 times and FCF yield of 13%.”

Liontown: Open pit mining commences 

• Macquarie: $2.60 target price; Retains Outperform

• Notes: The on-time start of open-pit mining was viewed as ‘encouraging’. “LTR is advancing the DSO opportunity and preparing samples for potential customers … Earnings from DSO sales are not included in our base case and present upside to our valuation.”

Scans