Evening Wrap: ASX 200 higher, resource sector rallies, Japan PM gives uranium stocks a boost

The S&P/ASX 200 closed 36 points higher, up 0.52%.

A little green candle to snap a two-day losing streak led by energy and resource stocks, Wisetech close to all-time highs on bumper FY22 result, EML Payments hit by another fraud and a stepchange for nuclear power in Japan.

Let's dive in.

ASX 200, All Ords and All Tech intraday overview

Markets

• 7 out of 11 sectors higher

• Energy led thanks to a rebound in oil prices

• Tech also rallied buoyed by a 12.8% gain from Wisetech

• Materials outperformed with iron ore miners, copper, uranium and lithium names trading higher

• Staples underperformed but well off session lows after Coles fell -4.6% post earnings

• 57% of the top 200 companies advanced

Stocks

• WiseTech Global (ASX: WTC) +12.8% FY22 profits up 72% to $182m and ahead of Bloomberg estimates of $177m. EBITDA margins jumped to 50% from 41% a year ago, reflecting enhanced operating leverage and cost reduction programs

• Home Consortium (ASX: HMC) +10.9% delivers pre-tax funds from operations of $91m, up 143% compared to last year

  • Home Co: “We are currently tracking 6-12 months ahead of our previously stated AUM growth target of $10bn by the end of 2024 …”

• Iluka (ASX: ILU) +9.8% FY22 net profits jumped 186% to $369m

  • Iluka Managing Director: “Supply-side dynamics remained the dominant feature of mineral sands markets. For both zircon and high grade titanium feedstocks, scarcity has been exacerbated by the war in Ukraine and challenges in South Africa, with little by way of new production coming online.” 

• Domino’s Pizza (ASX: DMP) +7.6% FY22 profits slumped -12.5% to $165m and missed analyst expectations. Management reaffirmed 3-6% same store sales growth for FY23, even when growth for the first seven weeks of FY23 was down -2.4%

• Sonic Healthcare (ASX: SHL) +6.2% profits rose 11% to a record $1.46bn in FY22. Expects base pathology business to accelerate in FY23 alongside ongoing demand fo covid testing

• The Lottery Corporation (ASX: TLC) -1.6% posted a record FY22 result with revenue up 9.4% to $3.5bn and profits (before significant items) up 14.8% to $373m

  • Lottery Corp CEO: “[Demerged allowed] the world’s best-performing lottery businesses to operate on a standalone basis.” 

• Coles (ASX: COL) -4.6% FY22 posted 4.3% net profit growth to $1,048m ahead of Bloomberg estimates of $990. In FY23, Coles expects to be cycling through lockdowns in the first-half of FY22 and price inflation in the second-half

  • Coles flagged “increased pressure on household budgets due to rising inflation.”

  • “We are beginning to see our customers buying significantly more $1 Coles pasta and our $1 coffee at Coles Express has never been more popular."

• EML Payments (ASX: EML) -10.5% said its open banking business ‘Sentenial’ identified fraudulent merchants within its direct debit processing business. The company said that the maximum losses from the activity will not exceed 5.5m euros but may be lower “depending on the success of recovery actions”

• Hansen Technologies (ASX: HSN) -13.3% shares tumbled on low-to-mid single digit earnings and profit growth in FY22

  • Hansen CEO: “In the past 12 months, Hansen has experienced strong renewals, the continued adoption of new products by existing customers, as well as the addition of new logos like Exelon (the largest utility company in North America) to the Hansen customer base.”

Economy

• Fed Minneapolis President Neel Kashkari said:

  • If inflation was at 4.0%, I would be more willing to say let’s take out time, avoid risk overdoing it

  • FOMC can only relax on rates when there is compelling evidence that inflation is heading towards 2%

Commodities 

• Iron ore futures on China’s Dalian Commodity Exchange rose 1.07%

  • Most commodity futures opened higher in China including thermal and coking coal, crude oil and aluminium

Scans

Latest news

Post market charts

S&P/ASX 200: A little green candle, pretty close to session highs. Would’ve been nice to close above the psychological 7,000 number. We’re still coming off two big red days where the market was sold off heavily intraday. It feels a little like no man's land at the moment. More right hand side is needed. (No chart below by the way)

S&P/ASX 200 Energy: Majors like Woodside (ASX: WDS) really starting to push. Can it have a crack at $35? Likewise, with oil starting to show a slight change of character (moving out of downward channel and pushing above the 20-day) is a move to previous highs on the cards? More broadly speaking, we're starting to see strength come back into commodities, including soft commodities like wheat, corn and soybeans.

Source: TradingView

S&P/ASX 200 Materials: Settling below the 200-day moving average. Iron ore miners had a massive open; most majors faded from session highs. Interesting to see the one of the two iron ore names from Tuesday’s Evening Wrap (Grange Resources) rip 11.2% higher.

Source: TradingView

S&P/ASX 200 Staples: Bouncing off the 200-day. It’s rather suspicious to see Coles fall -4.9% in the two days prior to its earnings. And then get dumped -5% post earnings. Staples Index in a volatile place after the three red days. 

Source: TradingView, Annotations by Market Index

Stocks

Uranium gets a kick: Uranium names start to rally around 1:00 pm AEST after reports that Japanese Prime Minister Fumio Kishida was calling for the development of new-generation nuclear plants to meet the nation’s energy needs. This represents a massive step change for Japan, which idled most of its nuclear reactions after the Fukushima disaster in 2011. Still, we’ve seen plenty of headlines in the past push uranium stocks higher, only to fizzle out a few days/weeks later. Is this time any different?

Paladin Energy price chart (Source: TradingView, Annotations by Market Index)

Broad-based lithium rally: Unlike the last two days where only the +$2bn names rallied (thanks to the Macquarie report). Wednesday witnessed broad-based strength across producers and explorers alike. A few household favourites like Core Lithium (ASX: CXO) and Lake Resources (ASX: LKE) are bouncing right on cue, off the 20-day moving average. More broadly speaking, the moves from lithium stocks have been rather V-shaped. Up until last week, you get a massive rally, followed by 1-4 red days, followed by more strength. After such volatile moves, some consolidation would be nice. Or not.

What to look out for on Thursday

First sign of strength, more is needed: Energy and resources carried the market well into positive territory. The market is in this awkward place after a massive month long rip from July lows and then a bearish two day dip.

Europe in a dark place: I say that both literally and metaphorically. European gas prices have surged so much they're equal to at least US$1,000 a barrel of oil equivalent. Contrary to how inflation is peaking in the US, the Eurozone is likely going to see more pain as power prices explode and the euro is in free fall. The euro briefly hit 99.5 US cents on 14 July before rallying higher. Now, it's decisively broke parity. Could Europe be the next headline or catalyst that impacts the market?

Hello, Kerry here. It's been able a week since we kicked off the Evening Wrap. We're hoping to update that 'intraday overview' image with something better. My emails are always open to feedback, suggestions and questions. Cheers :)