Evening Wrap: ASX 200 flat, NZ Reserve Bank hikes by 50 bps to 5.25%, gold stocks surge

The local sharemarket ekes out a small gain to extends its winning streak to eight, business conditions in Australia's industrial sector deteriorate in March, the Reserve Bank of New Zealand unexpectedly hikes interest rates by 50 bps and gold stocks surge as spot prices crack US$2,000 an ounce.

Let's dive in.

ASX 200 Session Chart

ASX 200 finishes around breakeven in choppy trade (Source: Market Index)

Markets

A pretty quiet session for the ASX 200 outside of gold stocks, that surged after spot prices broke above US$2,000 an ounce overnight.

• Healthcare stocks led as CSL (+1.0%) rose to a one month high

• Communication Services was propped up by names like Seek (+4.2%), Nine Entertainment (+4.3%) and TPG Telecom (+2.2%)

• Materials are on a three day skid, down 2.3%

• Energy stocks, notably energy and coal gave back gains

Economy

Australia’s industry index fell to -6.1 pts in March from -1.8 pts in the previous month. There are some pretty bearish comments from the report, including:

• “The new orders indicator collapsed by 28.1 points to -19.8. The monthly fall in new orders for the Aii exceeds the April 2020 fall caused by COVID shutdowns.”

• “Activity/sales remained in negative territory, while employment dropped to very mild growth. Price pressures continued to ease somewhat but all price indicators still remain in significant expansion.”

• “Manufacturing rebounded in March, led by a recovery in the chemicals and food & beverage sectors. Construction remained in mild contraction, business services fell into steep contraction.”

Latest news

Market Insights

New Zealand hikes by 50 bps

The Reserve Bank of New Zealand unexpectedly hiked interest rates by 50 bps to a more than 14-year peak of 5.25%.

22 of 24 economists in a Reuters poll had forecast the RBNZ to raise rates by just 25 bps.

"The Committee was comfortable that current lending rates faced by businesses and households will help ensure core inflation and inflation expectations begin to moderate," the RBNZ said in a statement.

"However, wholesale interest rates have fallen significantly since the February Statement, and this could put downward pressure on lending rates."

"As a result, a 50 basis point increase in the OCR was seen as helping to maintain current lending rates faced by businesses and households, while also supporting an increase in deposit rates."

Market mood

Wednesday was the first session where the ASX 200 did not close towards session highs. The market is beginning to get a little fatigued after an eight day winning streak.

That said, April has traditionally been one of the strongest months of the year for the ASX 200. Tied in equal place with December, up an average 0.11%. Do we continue to see seasonality at play here? Before the market tapers off in May and June, where the ASX 200 falls an average -0.02% for both months?

ASX 200 chart (Source: TradingView)

Interesting news and movers

Trading higher

• +20.0% Red 5 (RED) – Reports Q3 gold production

• +15.4% Blue Energy (BLU) – Sapphire Pilot production update

• +8.1% Core Lithium (CXO) – Resumes full ops at Finniss

• +5.9% Kazia Therapeutics (KZA) – Continuation rally, up 21% in last three

• +4.0% Gold Road (GOR) – Reaffirms Gruyere mine life

• +3.3% Viva Energy (VEA) – Acquires OTR Group

• +3.0% Capricorn Metals (CMM) – Reports Q3 production

• +1.5% West African Resources (WAF) – Reports Q1 production

• Gold sector move: Bellevue Gold (+8.7%), Ramelius (+8.1%), Evolution Mining (+4.0%)

Trading lower

• -12.95% Frontier Digital (FDV) – Capital raising

• -4.1% Magellan Financial (MFG) – March FUM

Broker updates

Macquarie on Seek (SEK): Outperform with $32.50 target price 

• “SEEK provided five-year CAGR aspirations for ANZ yield growth of high single digits.”

• “SEEK downgraded its FY23 revenue guidance to $1,245m, down $15m or ~1% reflecting softer job ad listings.”

• “While there may be some near-term risk to revenue forecasts, we expect earnings risks have largely abated due to flexibility in the cost base.”

Citi on St Barbara (SBM): Neutral with $0.65 target price

•  “SBM and GMD are in a trading halt pending alternative transaction structures and capital requirements.”

• “The valuation outlook for Hoover House and Phoenician is murky. SBM needs GMD and the slated $275m in new equity the deal should bring.”

Scans