Evening Wrap: ASX 200 higher, resources underperform, unemployment rate falls to 3.4%

The S&P/ASX 200 closed 14 points higher, up 0.19%.

The local sharemarket inches higher but held back by weakness across mining and oil stocks, Australia's unemployment falls back to a near 50-year low and Webjet shares surge as bookings return to pre-pandemic levels.

Let's dive in.

Markets

The ASX 200 managed to snap a three day losing streak as 9 sectors worked hard to offset the losses from Materials and Energy.

• A mix of defensive and growth sectors outperformed

• Staples headlines gains, with Woolworths and Coles both gaining almost 2% and trading near a 2-month high

• Energy led to the downside as oil prices eased after geopolitical tensions somewhat eased between Russia and NATO. Woodside finished the session down -2.1%

• Materials also sold off after a weak overnight session for commodity markets, weighed by hawkish Fed speeches and a stronger US dollar. Heavyweights BHP, Rio Tinto and Fortescue fell between 1-2%

• 118 of the top 200 advanced (59%)

Economy

Japan’s trade deficit widened to 2.16 trillion yen in October from 2.09 trillion yen in September. 

• Well above analyst expectations of a 1.61 trillion yen deficit

• The trade gap continues to widen amid a weak yen and elevated commodity prices

Australia’s unemployment rate fell to 3.4% in October from 3.5% in September.

• Beat analyst expectations of a rise to 3.6% 

• “It was a strong update even though holidays, sickness and floods continue to hold back the recovery. Unemployment is now the lowest level since November 1974.” - Westpac Economics 

• “... a pickup in immigration with annual growth in the working age population lifting from 0.6% yr last December to 1.2% yr in October. Prior to COVID annual growth in the working age population peaked at 1.7%yr in 2018-19."

Commodities 

"Strong economic data saw rate hike rhetoric and a hawkish Fed weigh on sentiment. Commodities struggled amid the risk-off tone, with a stronger USD also creating headwinds for the sector," said ANZ senior commodity analyst, Daniel Hynes.

• Iron ore futures fell -0.9% to US$91.9 a tonne

• Copper -1.5% to US$3.71/lb

• Newcastle coal futures -4.2% to $316 a tonne

Latest news

Post market brief

Nothing too exciting at the index level. Recently, we've seen a lot of days where resources rally but all others sectors are red and vice versa. Still, there's nothing wrong with these small moves at a rather extended level, relative to key moving averages.

Index

S&P/ASX 200: Nothing much to see here.

XJO chart (Source: TradingView)

S&P/ASX 200 Energy: A close on the 20-day moving average. 

XEJ chart (Source: TradingView)

S&P/ASX 200 Tech: Closes at a six week high. A lot of base-y tech names holding up surprisingly well, relative to the Nasdaq. Names like WiseTech, Altium and Tyro have all managed to move relatively sideways in the last few weeks. Could a breakout be on the cards?

XIJ chart (Source: TradingView)

Major announcements

Large caps (>$1bn)

• Pendal (PDL) +10.5% the Supreme Court of NSW said Perpetual would potentially be liable to more than the ‘break fee’ of $23m

• Webjet (WEB) +10.1% said 1H23 Group bookings are back at pre-pandemic levels, with total transaction volumes at 90% of pre-pandemic levels at a cost base thats -16% lower 

• Seek (SEK) +1.7% reaffirmed its FY23 guidance, noting low unemployment and high candidate engagement continue to provide generally positive market conditions

• John Lyng Group (JLG) +0.9% reaffirmed its FY23 guidance of 15% revenue growth and 26% EBITDA growth  

• Seven Group (SVW) +0.6% reaffirmed its existing guidance of high single-digit to low double-digit underlying EBIT growth for FY23 

• ASX (ASX) -0.2% expects a $245-255m write up to reflect its failed CHESS replacement project 

• Sayona Mining (SYA) -4.3% acquired 985 sq km near its Moblan Lithium Project in Quebec, Canada for C$40m worth of company stock 

• Australian Agricultural Co (AAC) -4.96% 1H21 profits fell -38% to $51.6m as a result of fair value adjustments as cattle prices normalise 

Mid-to-small caps

• TerraCom (TER) +8.9% declared a final dividend of 10 cents per share. The company has paid out a dividend yield of more than 25% since July 

• Alpha HPA (A4N) +6.8% said its HPA First Project is now being commissioned and the company is now assessing a full-scale final investment decision, with a focus on sales, offtake and project financing 

• Cettire (CTT) +0.6% reported 71% revenue growth for the month of October, to $45.9m. The company said its operated to maximise profitable revenue growth, with $40m cash as at 31 October 

• Whitefield Industrials (WHF) +0.6% reported 6.7% net profit growth in FY22 to $8.5m

• Neometals (NMT) -0.9% completed a pre-feasibility study for the production of titanium and iron-vanadium from its Barrambie Project. Results confirm a supply in excess of 500,000tpa in the first 10 years of the project 

• Emeco (EHL) -2.0% expects FY23 EBITDA to be between $245-260m from $250m in FY22  

Broker updates 

Scans