Evening Wrap: ASX 200 falls, Wisetech hits all-time high + How does the market perform in May

The ASX 200 Tech Index rallies for a fourth consecutive session, Tyro Payments shares tumble as Potentia Capital abandons takeover talks, the BNPL is set to be regulated as a credit product, how does the ASX 200 tend to perform in May and a few Macquarie notes.

Let's dive in.

ASX 200 Session Chart

ASX 200 closes lower on Monday (Source: Market Index)

Markets

The ASX 200 finished lower on Monday, in-line with how the S&P 500 pulled back from year-to-date highs last Friday. The market continues to show a preference for the Tech sector, with Wisetech (+1.9%) closing at an all-time high and Xero up almost 20% in the last four sessions. Woodside (+1.1%) closed at a one month high despite lower oil prices. Other than that, everything else pretty much pulled back slightly.

Economy

No major economic announcements.

Latest news

Market Insights: Seasonality

There's not a whole lot going on with markets at the moment. But maybe that's exactly what's it supposed to be like. Especially when we're wedged between "Sell in May" and "June tax loss selling".

From a seasonality perspective, May 22 is Day 142, which corresponds to more chop, at least through to July.

ASX 200 historic performance based on data from June 1992 to March 2023 (Source: Market Index)

The ASX 200 tends to be negative in these four months of the year, with monthly seasonal returns (based on data from June 1992 to March 2023) of:

• March -0.01%

• May -0.58%

• June -0.68%

• September -1.20%

Interesting news and movers

Trading higher

• +29.5% Gentrack (GTK) – Earnings

• +15.0% Bigtincan (BTH) – Potential takeover offer

• +8.5% Brainchip (BRN) – Continuation rally, up 12% in previous three

• +6.6% Hastings Tech (HAS) – Continuation rally, up 13% in previous three

• +3.4% St Barbara (SBM) – Silver Lake revises bid

• +0.8% New Hope Corp (NHC) – Earnings

Trading lower

• -16.6% Tyro Payments (TYR) – Takeover bid withdrawn

• -14.3% Incannex Healthcare (IHL) – Pullback after up 40% in previous three

• -10.8% Galan Lithium (GLN) – Trading update

• -4.5% Genesis Minerals (GMD) – Silver Lake revises bid

• -4.4% Zip (ZIP) – BNPL to be regulated

• -2.2% Sezzle (SZL) – BNPL to be regulated

• -2.1% Fisher & Paykel (FPH) – Downgraded by Macquarie

• -1.3% City Chic (CCX) – Trading update

• Discretionary sector move: Accent Group (-5.8%), Super Retail Group (-3.9%), Premier Investments (-2.4%)

Broker notes

Morgan Stanley notes:

Austral (ASB): Outperform with $2.60 target price

• “ASB awarded a ~US$114m incentive (firm target) and firm-fixed-price contract for detail design of the T-AGOS 25 Class for the US Navy.”

• “ASB’s strategy of diversifying its earnings streams continues to pay dividends and increases visibility into its achieving a successful transition as the LCS program winds down.”

Core Lithium (CXO): Outperform with $1.30 target price

• “CXO has announced the approval of early works at the BP33 development; project FID is scheduled in 1QCY24.”

• “We note the pre-FID funding of A$45-50m is 125%-150% higher than the prior guidance of A$20m.”

• “We note that BP33 accounts for ~40% of CXO’s total contained Li2O in reserves and is the sole ore source from FY28-FY33 in our development scenario for Finniss.”

• “CXO is trading on free cash flow yields of 9% for FY24e and 30% for FY25e and FY26e.”

Metcash (MTS): Downgrade to Neutral with $3.90 target price

• “Customers are reverting to pre-Covid habits and seeking value, which is seeing Aldi gain share at the expense of smaller IGAs.”

• “business. Some of these consumer habits have begun to reverse as we come out of Covid and cost of living pressures build. With the current macroeconomic backdrop, we continue to prefer staples.”

• “We note downside risks to our call include inflation easing, or consumer spending remaining resilient. The upside risk to our call include the further tightening of interest rates.”

ResMed (RMD): Outperform with $38.00 target price

• “Our analysis highlights potential for improved industry device volume growth from 2023, with sizeable market share opportunities for RMD.”

• “We remain positive on the medium-to-longer-term outlook for RMD, underpinned by an expectation for increased new patient set-ups (delayed diagnosis due to COVID-19, increased OSA awareness).”

Scans