Market Wraps

Evening Wrap: ASX 200 higher + UBS upgrades Woolworths to a Buy

Mon 19 Jun 23, 5:05pm (AEST)

 The S&P/ASX 200 closed 44 points higher, up 0.60%. 

Defensive sectors like Healthcare, Staples and Utilities carried the market higher while Resources underperformed, the ASX 200 rallies above a key trendline while Small Ords stabilise, China's economic activity slowed across the board in May, Citi upgrades Woolworths to a Buy and Macquarie reiterates its bullish view for lithium miners.

Let's dive in.


Today in Review

Mon 19 Jun 23, 4:40pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,294.9 +0.60%
All Ords 7,489.2 +0.51%
Small Ords 2,838.7 -0.13%
All Tech 2,450.0 +0.89%
Emerging Companies 2,037.3 -0.21%
Currency
AUD/USD 0.6859 -0.18%
US Futures
S&P 500 4,452.75 -0.02%
Dow Jones 34,567.0 -0.11%
Nasdaq 15,282.0 +0.09%
Name Value % Chg
Sector
Health Care 42,155.3 +1.90%
Consumer Staples 13,251.7 +1.61%
Utilities 8,873.0 +1.16%
Information Technology 1,848.3 +1.07%
Industrials 6,912.4 +1.06%
Real Estate 3,080.8 +0.98%
Financials 6,223.5 +0.92%
Consumer Discretionary 2,966.1 +0.79%
Communication Services 1,562.7 +0.75%
Materials 18,457.9 -0.55%
Energy 11,089.4 -0.60%

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ASX 200 Session Chart

S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
ASX 200 rallies intraday and closes near best levels (Source: Market Index)

Markets

Note: US markets are closed tonight in observance for the Juneteenth National Independence Day.

The ASX 200 extends its winning streak to six and pushed above a key trendline. It was a rather odd session because last Friday's winners (Materials and Energy) led to the downside. While laggards like Healthcare, Staples, Utilities and Industrials rallied. Some notable names include: CSL (+2.4%) bounced after a three-day selloff, Woolworths (+2.4%) higher on a positive broker note and AGL (+1.4%) extended gains after its upbeat Investor Day last Friday. Overall, the market remains in an awkward place. The Resource sector is settling after a big bounce. US markets remain extended and traders are watching for a constructive pullback. Let's see how this week goes.

Economy

No major economic announcements.


Latest news


Talking Technicals: ASX 200, Small Ords

The ASX 200 is getting a little extended. Is a pullback on the cards?

XJO chart
ASX 200 daily chart (Source: TradingView)

Small caps have underperformed the market but starting to stabilise from a 6 week downtrend. There's been a lot of interest in the Russel 2000. So we can see a turn for local small caps?

XSO
ASX Small Ords daily chart (Source: TradingView)

China's Post-Covid Flop

Some insightful charts from the Financial Times that show a slowdown in Chinese economic activity in May. Gives more context as to why things like iron ore stocks were under pressure from late April through to early June. And now rallying on growing stimulus expectations.

2023-06-19 16 57 10-Fy8yYWyWwAERkIA (1452×1314)
Source: Financial Times

Interesting news and movers

Trading higher

  • +21.6% PointsBet (PBH) – Update on DraftKings proposal

  • +13.4% Centaurus Metals (CTM) – Vale offtake

  • +8.4% Lynch Group (LGL)

  • +5.8% Abacus Property (ABP) – Equity raise, DPS outlook

  • +6.8% Mesoblast (MSB)

  • +5.1% Fineos Corp (FCL) – Contract win

  • +4.3% Kogan (KGN)

  • +2.4% Woolworths (WOW) – Upgraded by UBS

  • +2.0% Suncorp (SUN) – Banking update (Fri)

  • +1.5% Karoon Energy (KAR) – Production guidance

  • +0.9% Regis Healthcare (REG) – Plans to sell vacant land

Trading lower

  • -20.0% Lake Resources (LKE) – Kachi brine update

  • -6.0% Liontown (LTR)

  • -4.3% Iluka Resources (ILU) – Downgraded by UBS

  • -4.2% Hastings Technology (HAS) – Downgraded at Barrenjoey

  • -3.6% DGL Group (DGL) – Continuation selloff, down 29% in previous three

  • Retail stocks move: Accent (-3.6%), Myer (-3.2%), Universal Store (-4.3%)

  • Coal sector move: New Hope (-5.8%), Terracom (-5.4%), Stanmore (-3.6%)


Broker notes

Macquarie notes of interest:

Allkem (AKE) – Outperform with $17.50 target 

  • “AKE has provided an update on its Mt Cattlin Ore Reserve estimates, up 34% to 7.8mt at 1.20% Li2O.”

  • “The reserve upgrade at Mt Cattlin has translated to a mine life extension to our base case forecast.”

  • “We believe there is further LoM upside via the potential underground mining at Stage 4-2. The merger between AKE and LTHM offers potential for significant synergies, in our view.”

Mineral Resources (MIN) – Outperform with $109.00 target price

  • “MIN has announced a gas discovery at the North Erregulla Deep-1 gas well; early exploration results at Mt Marion are also encouraging.”

  • “Mt Marion FY23 spodumene guidance was downgraded while Wodgina spodumene output is tracking to the lower end of the guidance range with higher costs.”

  • “We have incorporated the termination of toll treating agreement at Mt Marion, mixed volume guidance updates and higher lithium costs at Wodgina. We cut EPS forecasts by 3-20% in FY24-FY28E.”

UBS notes of interest: 

CSL (CSL) – Buy with $340.00 target price

  • “Following CSL's FY24 NPATA profit guidance, we retained our Buy rating and having cut our numbers see limited tangible downside risks from here.”

Woolworths (WOW) – Buy with $43.00 target price

  • “Following a review of our investment thesis, we upgrade WOW from Neutral to Buy. The sales outlook for Aust Food is positive due to more positive industry drivers and greater confidence that WOW can gain further market share.”

  • “The external environment is becoming increasingly challenged for Australian retail and consumer companies, with WOW having lower earnings risk and arguably benefiting from this external backdrop.”

Coles (COL) – Neutral with $18.50 target price

  • “Following a review of the outlook for the food retail industry, we upgrade our sales estimates for COL as well as WOW.”

  • “Yet we also lower EBIT margins for COL due to higher labour costs. Our estimates for Supermarkets EBIT and COL EPS are unchanged.”

  • “We expect the WOW superior store network, execution and online offer (catering to convenience and the emerging saver customer) will see it gain market share and grow LFL sales above COL.”


Scans 

Top Gainers

Code Company Last % Chg
AFW Applyflow Ltd $0.015 +50.00%
BM8 Battery Age Miner... $0.45 +32.35%
G50 Gold 50 Ltd $0.185 +32.14%
AQC Australian Pacifi... $0.15 +30.44%
FTL Firetail Resource... $0.12 +30.44%
View all top gainers

Top Fallers

Code Company Last % Chg
OPN Openn Negotiation... $0.012 -60.00%
PKD Parkd Ltd $0.019 -40.63%
SFM Santa Fe Minerals... $0.046 -24.59%
TGH Terragen Holdings... $0.021 -22.22%
TOY Toys'R'US ANZ Ltd $0.011 -21.43%
View all top fallers

52 Week Highs

Code Company Last % Chg
ONE Oneview Healthcar... $0.305 +19.61%
GRE Greentech Metals Ltd $0.525 +17.98%
NGX NGX Ltd $0.29 +16.00%
AUG Augustus Minerals... $0.27 +14.89%
XAM Xanadu Mines Ltd $0.09 +12.50%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
OPN Openn Negotiation... $0.012 -60.00%
SFM Santa Fe Minerals... $0.046 -24.59%
TGH Terragen Holdings... $0.021 -22.22%
TOY Toys'R'US ANZ Ltd $0.011 -21.43%
LKE Lake Resources N.L. $0.38 -20.00%
View all 52 week lows

Near Highs

Code Company Last % Chg
WTC Wisetech Global Ltd $80.56 +0.60%
NDIA Global X India Ni... $61.81 +0.24%
KGN Kogan.com Ltd $4.91 +4.25%
IKO Ishares MSCI Sout... $98.44 -0.48%
WVOL Ishares Edge MSCI... $35.62 +0.37%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
DGL DGL Group Ltd $0.80 -3.61%
YANK Betashares Strong... $11.50 +0.97%
ETPMPM Global X Metal Se... $198.77 +0.44%
PLUS Vaneck Australian... $16.00 +0.38%
IXI Ishares Global Co... $89.79 +0.49%
View all RSI oversold

Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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