Evening Wrap: ASX 200 higher, Resources and Tech sold off, US futures rise

 The S&P/ASX 200 closed 25 points higher, up 0.35%. 

The local sharemarket rallied in early trade but failed to hold onto gains, ANZ-Indeed Job Ads continue to ease but remain 52.5% higher than pre-pandemic job levels, Japanese consumer confidence rises to a 3-month high and the RBA is set to pause rates again at 2:30 pm AEST tomorrow.

Let's dive in.

ASX 200 Session Chart

Another choppy session where the ASX 200 failed to hold onto session highs (Source: Market Index)

Markets

Another positive but choppy session, with the ASX 200 fading from session highs of 0.8%. A lot of names in the Resources and Tech space opened higher but were sold down rather aggressively, including Allkem (ASX: AKE), Pilbara Minerals (ASX: PLS), Technology One (ASX: TNE) and WiseTech (ASX: WTC).

Allkem (blue), Pilbara Minerals (orange), Technology One (red) and WiseTech (green)

Economy

ANZ-Indeed Job Ads fell 0.3% month-on-month in April following a 2.7% fall in March.

• Job ads are still 52.5% higher than pre-pandemic levels

• Levels are now 7.7% lower than the September 2022 peak

• “The level remains very high, signalling significant unfilled labour demand, and is consistent with solid employment gains. Employment surged by almost 117,000 over February and March, keeping the unemployment rate steady at 3.5%.” – ANZ Senior Economist, Catherine Birch

• “The volume of jobs created has still been sufficient to absorb a high level of net migration. Labour demand remains robust nationally, with particular strength noted among graduate recruitment. Graduate-related job ads were 24% higher during the first quarter, compared with a year earlier.” – Indeed Senior Economist, Callam Pickering

Japan’s Consumer Confidence rose to 35.4 in April from 33.9 in March.

• Highest reading since January 2022

• Household sentiment strengthened across all components, notably overall livelihood, income growth, employment and willingness to buy durable goods 

Latest news

Market Insights: RBA rate hike in focus

The RBA is set to pause again on Tuesday at 2:30 pm AEST. We'll talk about more about expectations in the Morning Wrap tomorrow.

In terms of ASX 200 price action on rate hike days, it's so far been the year of no surprises.

• 7 Feb -0.46% (in-line)

• 7 March: +0.49% (in-line)

• 8 April: +0.18% (in-line)

Which is generally the case for the RBA, minus three decisions days from last year.

• 3 May -0.42% (larger-than-expected)

• 7 Jun -1.53% (larger-than-expected)

• 5 Jul +0.25% (in-line)

• 2 Aug +0.07% (in-line)

• 6 Sep -0.38% (in-line)

• 4 Oct +3.48% (smaller-than-expected)

• 1 Nov +1.65% (in-line)

• 6 Dec -0.78% (in-line)

Interesting news and movers

Trading higher

• +19.0% PointsBet (PBH) – Continuation rally

• +14.6% Sezzle (SZL) – Business update

• +12.4% 4DMedical (4DX) – VA commercial scanning

• +9.1% Perenti (PRN) – Contract win

• +6.6% ResMed (RMD) – Earnings

• +2.3% Santos (STO) – PNG LNG sell-down exclusivity period extended

• +1.2% Judo Capital (JDO) – Earnings

Trading lower

• -10.8% Syrah Resources (SYR) – Continuation selloff, down 23.3% in last three

• -8.6% Betmakers (BET) – Q3 update

• -7.7% EcoGraf (EGR) – Earnings

• -5.4% Adore Beauty (ABY) – Business update

• -3.9% ClearView (CVW) – Managing Director retirement

Broker updates

Macquarie notes:

Coles (COL): Outperform with $20.00 target price

• “Comp sales were up 6.5% vs the pcp, with moderately positive volumes. Inflation of 6.2% was likely a key driver in sales growth over the quarter. This result is in line with our expectations of mid-to-high single digit sales growth.”

• “We are concerned that the rising cost of living, fixed rate mortgage roll-offs and normalising service consumption erodes consumer discretionary spending in the second half of calendar 2023.”

• “We seek relative safety in staples, particularly Coles. We note that a reduction in interest rates or a more resilient consumer are downside risks to our Outperform rating.”

IGO (IGO): Outperform with $20.00 target price

• “Greenbushes production, cash costs and realised prices were all in line with our estimates, while Kwinana volumes were better than we expected.”

• “The nickel performance was soft, and IGO has indicated it will impair the book value of the Western Areas assets its FY23 result.”

• “We make only modest changes to our earnings forecasts for IGO after incorporating the 3QFY23 result. Our FY23 earnings estimate falls ~1% while we lift FY24e by 9% to reflect a stronger ramp-up at Kwinana and slightly higher nickel production at Forrestania.”

Liontown (LTR): Outperform with $3.00 target price 

• “Open pit mining has commenced and LTR expected to award the underground contract in the 2HCY23.”

• “We note that given the scale and expandability of Kathleen Valley, we believe a premium to valuation could be justified in a change of control transaction. A 20-30% premium to our valuation translates to a range of ~A$3.35/share to ~A$3.60/share.”

Resmed (RMD): Outperform with $38.00 target price

• “RMD’s 3Q23 result highlighted improved device output, with revenue ahead of our forecasts/VisibleAlpha consensus expectations.”

• “We remain positive on the medium-to-longer-term outlook for RMD, underpinned by an expectation for increased new patient set-ups.”

• “In the near-term, we are looking for a continuation of robust revenue and the delivery of operating leverage.”

Scans