Market Wraps

Evening Wrap: ASX 200 flat + Uranium stocks are on the move

Tue 23 May 23, 5:03pm (AEST)

 The S&P/ASX 200 closed 4 points lower, down -0.05%. 

Another sleeper session with the Index mostly unchanged, Australia's manufacturing PMI remains in contraction while services shine, Biden and House Speaker Kevin McCarthy fail to reach an agreement but discussions described as 'productive' and uranium stocks are on the move, but is it just another fake rally?

Let's dive in.


Today in Review

Tue 23 May 23, 4:17pm (AEDT)

Name Value % Chg
Major Indices
ASX 200 7,259.9 -0.05%
All Ords 7,447.4 -0.04%
Small Ords 2,863.5 -0.21%
All Tech 2,350.1 +0.30%
Emerging Companies 2,065.3 -0.32%
Currency
AUD/USD 0.665 -0.04%
US Futures
S&P 500 $4,209.0 +0.10%
Dow Jones $33,377.0 +0.05%
Nasdaq $13,923.0 +0.15%
Name Value % Chg
Sector
Financials 6,198.0 +0.77%
Real Estate 3,166.4 +0.57%
Energy 10,931.1 +0.35%
Information Technology 1,726.1 +0.22%
Health Care 44,780.7 +0.12%
Communication Services 1,561.6 +0.10%
Utilities 8,483.8 -0.22%
Industrials 6,853.1 -0.54%
Materials 17,822.2 -0.74%
Consumer Staples 13,151.6 -0.83%
Consumer Discretionary 3,017.5 -1.04%

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ASX 200 Session Chart

ASX 200 intraday
ASX 200 higher but closed off session highs (Source: Market Index)

Markets

There's not a whole lot going on. It's kind of like moving your mouse every 5 mins to make sure your status remains 'online'. The ASX 200 closed slightly lower from session highs of 0.34%. The weakness was mainly attributable to a pullback for resources, with the S&P/ASX 200 Materials Index down 0.74% from session highs of 0.45%. The US debt ceiling remains a closely watched catalyst, with Biden and House Speaker Kevin McCarthy failing to reach an agreement this morning on how to raise the US government's US$31.4tn debt ceiling with just 10 days before a potential default.

Economy

Australia’s Manufacturing PMI was unchanged at 48.0 in May.

  • Signals third consecutive monthly deterioration (reading below 50)

  • “Australia’s manufacturing sector continues to slow in May and is on track for a soft landing.” – Warren Hogan, Chief Economic Advisor at Judo Bank

  • “The manufacturing indicators do not signal recession. We would need to see a further marked deterioration in the manufacturing survey to be concerned about a sharper downturn.”

Australia’s Services PMI fell from 50.8 in May from 53.7 in the previous month.

  • “While input cost inflation eased in May, faster demand growth provided firms with better pricing power, leading to higher selling price inflation.”

  • “The recent strength in services results stands in contrast to manufacturing. Far from the risk of recession, the services PMI suggests that the risk is that the Australian economy is experiencing a pick-up in activity since February.”

  • ““The pick-up in the services PMI is consistent with a stronger housing market in recent months, rising population growth and a pick-up in job advertising.”


Latest news


Market Insights: Uranium

Uranium has been one of those commodities with a bullish long-term narrative but has failed to turn it into anything material in the near-term.

The Global X Uranium ETF is a targeted play on uranium mining and the production of nuclear components, and a good barometer for how the industry is performing. The ETF is:

  • Down 3.7% year-to-date

  • Down 1.4% in the last twelve months

  • Trading at the same levels as March 2021

  • Double pre-Covid levels

The ETF is tarting to make some moves again, rallying to a two-month high earlier this month and up 2.9% overnight. This begs the question: Are we on to something or is this just another move within its usual range?

Uranium ETF
Global X Uranium ETF chart (Source: TradingView)

A few updates and stats of interest:

  • A bill banning Russian uranium imports to the US passed a committee in the House of Representatives on 17 May 2023

  • US production of uranium concentrate (U3O8) was 2,511 points in the first quarter of 2023, which was a 75% drop compared to a year ago

  • In 2021, imports from Kazakhstan accounted for 35% of US nuclear supply, 14.8% from Canada, 14.4% from Australia and 13.5% from Russia. Only 5.3% of supply was produced from domestic sources, according to the US Energy Information Administration

Again, these stats sound pretty exciting and a positive for uranium. But let's see if the stocks and ETF can hold recent gains and push key price points (e.g. x month high and key moving averages).


Interesting news and movers

Trading higher

  • +20.1% OFX Group (OFX) – Earnings

  • +12.3% Silk Laser (SLA) – New Competing Takeover

  • +7.4% Catapult (CAT) – Earnings

  • +3.5% New Hope (NHC) – Earnings (Mon)

  • +3.2% Tabcorp (TAH) – Upgraded by Morgan Stanley

  • +2.8% Technology One (TNE) – Earnings

  • Uranium sector move: Bannerman (+9.2%), 92 Energy (+6.7%), Alligator Energy (+6.1%), Paladin Energy (+5.3%), Deep Yellow (+4.8%)

  • BNPL sector move: Zip (+12.7%), Sezzle (+3.2%) 

Trading lower

  • -17.7% Brainchip (BRN) – Pullback after +24.4% in previous three

  • -3.0% Sonic Healthcare (SHL) – Initiated Sell at UBS

  • -2.2% Webjet (WEB) – Downgraded by RBC (Mon)

  • -2.2% Qantas (QAN) – Market Update


Broker notes

Morgan Stanley notes from Tuesday, 23 May:

City Chic (CCX): Equal-weight with $0.60 target price

  • “We think this market update is below consensus expectations, placing further downside risk on FY23/24 earnings forecasts.”

  • “The LT impact on CCX's brands from aggressive discounting remains unknown, with a risk that gross margins are permanently impaired if discounts become entrenched.”

Lendlease (LLC): Equal-weight with $9.50 target price

  • “LLC has sold a 21% interest in its US Military Housing asset management business for A$126m, translating to a A$75m benefit to NPAT in FY23.”

  • “LLC now anticipates that Development segment ROIC will be 2.50-3.25% (down from the lower end of the 4-6% range previously).”

  • “Our understanding is that slower transactions in the current environment have impacted timing of transactions (eg, Victoria Cross sell- down, timing of some residential).”

Tabcorp (TAH): Overweight with $1.30 target price

  • “We expect the announcement of the VIC license award around mid- 2023,ahead of its expiry in mid-2024.”

  • “We see meaningful upside to TAH's future earnings trajectory (+25% FY25e) if it successfully retains the license, thanks to the potential reset of fees and taxes.”

  • “Moreover, we expect that even under a scenario whereby TAH loses the retail license (and operates on a digital-only basis), its earnings would be no worse than under the current arrangement.”

Webjet (WEB): Equal-weight with $6.50 target price

  • “Ahead of WEB's FY23 result on Wed 24th May we set out guidance, consensus expectations and where we feel the focus will be in terms of FY24's outlook.”

  • “We are attracted to the recovery tailwinds in travel but prefer the earnings visibility of peers, so stay EW into FY23 results.”

  • “We are bullish on travel exposed names but see greater certainty in the pathway to FY24 cons expectations in other names including CTD,yet CTD trades at more modest multiple (19x cons vs 27x for WEB).”


Scans

Top Gainers

Code Company Last % Chg
WSR Westar Resources Ltd $0.078 +56.00%
TSL Titanium Sands Ltd $0.012 +33.33%
DBO Diablo Resources Ltd $0.049 +28.95%
AX8 Accelerate Resour... $0.023 +27.78%
RTG RTG Mining Inc $0.073 +23.73%
View all top gainers

Top Fallers

Code Company Last % Chg
BGT Bio-Gene Technolo... $0.095 -20.83%
AJL AJ Lucas Group Ltd $0.016 -20.00%
AW1 American West Met... $0.057 -18.57%
BRN Brainchip Holding... $0.42 -17.65%
LME Limeade Inc $0.12 -17.24%
View all top fallers

52 Week Highs

Code Company Last % Chg
WSR Westar Resources Ltd $0.078 +56.00%
RTG RTG Mining Inc $0.073 +23.73%
SLA Silk Laser Austra... $3.36 +12.00%
ZEU ZEUS Resources Ltd $0.031 +10.71%
CVL Civmec Ltd $0.78 +8.33%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
AJL AJ Lucas Group Ltd $0.016 -20.00%
CYP Cynata Therapeuti... $0.13 -13.33%
RRR Revolver Resource... $0.11 -12.00%
LKY Locksley Resource... $0.058 -9.38%
MPA Mad Paws Holdings... $0.10 -9.09%
View all 52 week lows

Near Highs

Code Company Last % Chg
WTC Wisetech Global Ltd $73.165 +0.21%
NDIA Global X India Ni... $61.72 +0.73%
STO Santos Ltd $7.42 +0.54%
USD Betashares U.S. D... $14.79 -0.07%
CSL CSL Ltd $309.32 +0.68%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
URW Unibail-Rodamco-W... $3.58 +0.56%
AMA AMA Group Ltd $0.133 +1.92%
MTS Metcash Ltd $3.63 -1.09%
CCR Credit Clear Ltd $0.215 +4.88%
VUL Vulcan Energy Res... $3.99 -5.00%
View all RSI oversold

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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