Evening Wrap: ASX 200 flat, Xero shares surge on job cuts, lithium stocks try to bottom

The S&P/ASX 200 closed 3.3 points higher, up 0.05%. 

A quiet and uneventful day for the ASX 200 as several large cap stocks trade ex-dividend, Xero announces 700-800 job cuts, China's inflation comes in at a cool 1.0% in February, lithium stocks are trying to bottom and some stats from Core Logic's Monthly Housing Chart Pack.

Let's dive in.

ASX 200 Session Chart

A quiet day with little price action (Source: Market Index)

Markets

The ASX 200 finished flat but there was strength underneath the hood. It's also worth noting that there were several heavyweight stocks that traded ex-dividend including BHP, Rio Tinto, South 32, CSL and Mineral Resources. We have US unemployment and payrolls data due on Friday, which will be another major market moving catalyst.

• Technology surged after Xero (+10.3%) announced a global restructure which will reduce 700-800 roles across the organisation

• Healthcare and Materials underperformed but mostly due to stocks trading ex-dividend

Economy

China’s CPI inflation eased to 1.0% year-on-year in February from 2.1% in January and well-below analyst expectations of 1.9%. 

• Inflation was down -0.5% month-on-month in January

• Producer price inflation was down -1.4% year-on-year, the fifth decline in a row

• Reflects weak domestic consumption as Chinese monetary and fiscal expansion continues to heavily boost the supply side

Latest news

Market Insights

Talking Technicals: Tech and lithium stocks

Tech is starting to get a move on, with the ASX 200 Info Tech Index making its first notable push above the 200-day moving average since December 2021.

ASX 200 Info Tech Index chart (Source: TradingView)

Lithium stocks experienced a broad-based rally on Thursday. A bellwether name like Pilbara Minerals is trying to bottom around both the $4.00 level and 200-day moving average (blue). Is this the bottom out process after such a whipsaw 2-3 months?

Pilbara Minerals chart (Source: TradingView)

Core Logic: Monthly Housing Chart Pack

Something a little bit different. Core Logic sent out its Monthly Housing Chart Park and it ain't pretty:

• National home values fell -2.3% in the three months to February but quarterly declines have been slowing since September last year

• Dwelling values in Australia are -7.9% lower over (-4.2% for regional and -9.1% for capitals) the past 12 months, the largest annual decline on record

• The monthly pace of decline eased substantially in February

Source: CoreLogic

Sales volume continue to trend lower as buyer demand slows. CoreLogic estimates that in the 12 months to February, national sales fell -21.2% year-on-year.

• At the national level, properties are taking longer to sell. In the three months to February, the median days on market was 41, up from a low of 20 days in three months to November 2021

• Listings for the four weeks to 5 March 2023 was down -12.7% than the previous five year average

Interesting news and movers

Trading higher

• +18.3% Myer (MYR) – 1H earnings

• +10.8% Weebit Nano (WBT) – Continuation rally, up 17% in last three

• +10.7% Xero (XRO) – Cost reduction program

• +9.1% Appen (APX)

• +9.1% Queensland Pacific Metals (QPM) – Continuation rally, up 12% in last three

• +6.5% Betmakers (BET) – Continuation rally, up 18% in last three 

• +6.4% Adriatic Metals (ADT)

• +5.3% Arafura Rare Earths (ARU)

• +5.1% Aeris Resources (AIS)

• Lithium sector move: Pilbara Minerals (+4.4%), Sayona Mining (+4.2%), Allkem (+2.7%)

Trading lower

• -46.2% Gascoyne Resources (GCY) – Completes capital raising

• -15.2% Helia Group (HLI)

• -4.7% 29Metals (29M) – Suspends operations due to heavy rainfall

• -2.8% Kogan (KGN) 

Broker updates

Some more standalone Macquarie notes:

Carsales (CAR): Outperform with $25.10 target price 

• Carsales will acquire an additional 40% of WebMotors (to 70% ownership) for $353 million

• “TAM in Brazil is large, with limited success thus far of monetisation. Key opportunities include: dynamic pricing, finance, and media strategy.”

• “Our investment thesis is unchanged in that we are attracted to CAR’s cash-flow resilience through the cycle and its competitive position across its various marketplaces.”

Resolute Mining (RSG): Outperform with $0.33 target price

• “The annual resource and reserve statement saw a meaningful boost to both resources and reserves at Syama, primarily due to exploration success at Syama North.”

• “While the company expects continued growth from Syama North, and attention is now turned to the PFS, we note that we do not include the deposit as part of our inventory assumption and therefore presents clear upside to our base case.”

Super Retail Group (SUL): Neutral with $13.46 target price

• “While proxies for current trading have been strong, the macro outlook remains a risk. SUL needs to defend particularly tough comps post-Omicron and floods for the balance of CY23.”

Scans