Evening Wrap: ASX 200 higher, Macquarie's take on Pilbara Minerals, Coles sees further disinflation

The local sharemarket finishes the week down 0.3%, Coles says it expects input cost inflation to continue to moderate in the June quarter, Australian producer prices ease to 5.2% in the March quarter, the Bank of Japan maintains monetary policy but plans a review and Macquarie's take on Pilbara Minerals' quarterly.

Let's dive in.

ASX 200 Session Chart

ASX 200 breaks a 5-day losing streak (Source: Market Index)

Markets

The ASX 200 wasn't as enthusiastic as Wall Street, closing out the week in a rather choppy fashion. The market is trying to find a floor after falling for five straight days. So let's see if things continue to catch a bid next week. We've survived the bulk of US earning season, so stock and indexes can move a little more freely, without the 'megacap reports better-than-expected earnings after hours' that we've seen all week.

• Healthcare stocks led to the downside. Most major names declined including CSL (-1.1%),Cochlear (-1.0%) and Sonic Healthcare (-0.7%)

• Staples heavyweight fell after Coles (-1.4%) posted its March quarter quarter update where Group sales rose 6.5% to $9.4bn

Economy

Australia’s producer price index rose 1.0% quarter-on-quarter and 5.2% year-on-year in the March quarter.

• The main drivers to quarterly growth was electricity and gas supply (+13.3%), building construction (+1.1%) and education (+3.7%)

• Areas that demonstrated price falls included petroleum refining (-7.2%), furniture and other manufacturing (-5.8%) and computer and electronic equipment manufacturing (-3.5%)

The Bank of Japan kept interest rates unchanged at -0.1%.

• "The Bank will continue to maintain stability of financing, mainly of firms, and financial markets, and will not hesitate to take additional easing measures if necessary."

• Reiterated a dovish stance, tweaked its forward guidance and announced plans to conduct a policy review

Latest news

Interesting news and movers

Trading higher

• +41.5% Megaport (MP1) – Earnings

• +13.1% Mach7 Technologies (M7T) – Earnings

• +7.1% Pilbara Minerals (PLS) – Earnings (Thu after close)

• +6.9% Emerald Resources (EMR) – Drill results

• +6.8% Volpara Health (VHT) – Earnings

• +5.5% SiteMinder (SDR) – Earnings (Thu)

• Lithium sector move: Winsome (+10.5%), Pilbara (+7.1%), Sayona (+5.3%), Core Lithium (+4.3%), Vulcan (+3.8%), Allkem (+3.8%)

Trading lower

• -13.8% Splitit (SPT) – Earnings

• -12.3% Tesserent (TNT) – Earnings

• -12.2% Whispir (WSP) – Earnings

• -6.1% PointsBet (PBH) – Earnings

• -3.6% Brainchip (BRN) – Earnings

• -2.5% Dubber Corp (DUB) – Earnings

Broker updates

Macquarie notes:

Pilbara Minerals (PLS): Outperform with $7.70 target price

• “PLS has released its 3QFY23 with both shipments and realised spodumene prices largely in line with our estimates.”

• “The reported realised price of US$4,840/dmt was within 6% of our expectation. However, PLS also sold 10,253dmt of middlings product with an average realised prices of US$360/dmt (CIF China) which was not in our base-case forecast.”

• “PLS is generating strong cash flow, with free cash flow yields of 22% and 21% for FY23 and FY24 on our forecasts.” 

Telstra (TLS): Outperform with $4.68 target price

• “Telstra prepaid mobile plans to increase from July 2024. Mobile market rationalising thesis unfolding – Telstra to be a beneficiary. Outperform.” 

• “Incremental evidence of mobile markets rationalising. This is a key catalyst for the telcos to outperform, holding all else constant. We note upside risk to our/consensus earnings in FY25+ if inflation-linked pricing remains persistent.”

Scans