Evening Wrap: ASX 200 finishes the week down 2.1%, stocks whipsaw on rebalancing, Woodside bounces

The local sharemarket finishes the week down 2.1%, Woodside shares bounce after falling 5.4% to a six month low on Thursday, CBA shares surprisingly finish the week 1.0% higher, the last day of index rebalancing drives some crazy price action and a few reasons why the bear market might be over.

Let's dive in.

ASX 200 Session Chart

ASX 200 briefly dips into negative territory around noon before trending higher into close (Source: Market Index)

Markets

A much needed positive close after falling 5.5% in the last seven sessions. The ASX 200 is somewhat in 'no mans land' - oversold but far from any key moving averages and trendlines.

• Energy stocks bounced after Woodside tumbled 5.4% on Thursday

• Technology higher thanks to a 2.5% rally by the Nasdaq overnight

• Financials are trying to settle after the whole SVB and Credit Suisse fiasco, CBA shares finish the week 1.0% higher

• Real estate stocks led to the downside, with notable weakness from office REITs like GPT (-3.3%)

Economy

No major economic announcements. Next week is going to be huge with:

• Tuesday: RBA minutes, Canada inflation

• Wednesday: UK inflation

• Thursday: Fed rate decision, economic projections and press conference as well as Bank of England rate decision 

Latest news

Market Insights

Index rebalancing: Last minute buying

The ASX rebalancing is effective next Monday, 20 March. This means that funds that did not get their fill during the week are forced to buy or sell certain stocks to meet weighting requirements. This results in some pretty funky price action including:

Flops and fades:

• Kingsgate Consolidated (ASX: KCN)

• Fineos Corp (ASX: FCL)

• Genesis Minerals (ASX: GMD)

• PWR Holdings (ASX: PWR)

• Cettire (ASX: CTT)

Gains and rips:

• Talga Group (ASX: TLG)

• Weebit Nano (ASX: WBT)

• Hastings Technology (ASX: HAS)

You'll notice that these stocks are all making rather abrupt moves on the back of massive volumes. For next week, will mean reversion be on the cards for these stocks now that fund buying/selling is over?

Is the bear market over?

There's been a substantial macro turn in the past week or so:

• From peak to trough, bond yields crashed 25%

• US producer prices ease to 4.6% in February (-0.1% MoM) from 5.4% in January

• Fed and US Government steps in to provide liquidity for banks

• Fed balance sheet grows US$300bn last week

• Peak Fed funds rate and bond yields pull a 180 in the past week

• CNN's Fear & Green Index hits extreme fear

Is this enough to mark a turning point for markets?

Interesting news and movers

Trading higher

• +13.3% Kingsgate (KCN) – Chatree Gold Mine update

• +8.9% Talga Group (TLG) – Earnings & Rebal

• +6.5% Neuren Pharma (NEU) – Continuation rally, up 37% in last three

• +2.95% Worley (WOR) – Upgraded by Credit Suisse

Trading lower

• -8.7% Kelsian (KLS) – Capital raising

• -7.9% Synlait Milk (SM1) – Guidance update

• -1.1% IPH (IPH) – Cyber incident (Thurs)

• Gold sector move: Evolution Energy (-5.2%), Northern Star (-2.3%), Newcrest Mining (-2.2%)

• REITs sector move: GPT (-3.3%), Abacus Property (-2.3%), Charter Hall (-2.3%), Scentre Group (-1.9%)

Broker updates

A few Macquarie notes:

BHP (BHP): Outperform with $52.00 target price

• “BHP has commented on the recent media reports regarding the UK class action in relation to the Fundão Dam collapse at Samarco.”

• “Despite ongoing legal disputes, we believe the market should focus on BHP’s solid free cash flow generation. The rebound of iron- ore and coking coal prices underpins strong upgrade momentum for BHP with a spot price scenario generating 13% and 45% higher earnings than our base case for FY23 and FY24.”

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

• “The new mine plan is incrementally positive for PAN, with an additional one year of mine life compared to our prior assumptions.”

• “Positively, the ramp up at Savannah North appears largely complete with 72.3kt of ore mined in December.”

Patriot Battery Metals (PMT): Outperform with $1.75 target price

• “The equity raising is a positive which enables PMT to accelerate its exploration programs along the CV lithium trend.” 

• “The recent metallurgical test work has confirmed that Dense Media Separation (DMS) is the most likely process route for Corvette.” 

• “The release of the maiden resource estimate for Corvette by the end of June presents a key near-term catalyst for PMT.”

Scans