Evening Wrap: ASX 200 higher, Wesfarmers soars on Goldman Sachs upgrade, Energy stocks slump

The S&P/ASX 200 closed 30pts higher (+0.36%).

In a nutshell:

• Carl's away, so I've punched out a bite-sized Evening Wrap

• ASX 200 ticked higher and finished the week up 1.19%

• Wesfarmers shares soared after a Goldman Sachs upgrade

Let's dive in.

ASX 200 Session Chart

ASX 200 gapped higher and finished near best levels (Source: Market Index)

Markets

• ASX 200 finished 0.36% higher and near best levels

• Decent breadth, with 9 out of eleven sectors higher and 63.5% of ASX 200 constituents closing in positive territory

• Weekly recap: Emerging Companies (+0.32%), All Ords (+1.07%), ASX 200 (+1.19%)

• Discretionary was the best performing sector after Goldman Sachs upgraded Wesfarmers (+3.2%) to a Buy and a sizeable bounce for Premier Investments (+6.5%)

• Energy stocks continued to slide, with a heavyweight name like Woodside down 5.2% in the last six sessions, in-line with a six-day losing streak for oil prices, down 5.3 since 15-Jan as Trump seeks to boost US energy production

• Bank of Japan hiked interest rates by 50 bps to 0.5%, in-line with market expectations

• Next week is going to be massive – Mag-7 stocks to report Q4 earnings, last week of January will see a few ASX-listed companies pre-announce earnings, Aussie December inflation on Wednesday and Fed rate decision on Thursday morning (market pricing in 99.5% likelihood of a hold)

Economy

• Australia's January manufacturing PMI ticked higher to 49.8 from 47.8 in the previous month, within an arms reach of expansion territory, while services remained strong at 50.4 (down from 50.8% in December). Key highlights from the report include:

  • "Growth in activity was supported by higher new business, although export orders continued to fall in January."

  • "Average input costs increased at an accelerated rate in January, leading output charges to rise at the fastest pace in six months."

  • "Panelists often mentioned higher input material, energy, financing and wage costs contributing the latest increase in input prices."

  • "Business activity growth was again limited to the service sector, though the rate at which services activity rose eased to a six-month low."

• Japan's core inflation climbed to a 16-month high, in-line with market expectations by boosting the case for rate hikes

• UK's consumer confidence sank to the lowest level in over a year, down to -22 in January from -17 in December

Interesting Movers

Trading higher

• +23.9% Synlait Milk (SM1) – 1H25 guidance pointed to big earnings turnaround, EBITDA to be in the range of $58-63m vs. $19.9m a year ago

• +15.3% Earlypay (EPY) – Hired corporate advisor to assist with seeking bids for the entire company after major shareholder COG Financial Services announced plans to sell its 21.4% stake

• +6.5% Premier Investments (PMV) – Myer shareholders approved the company's proposed demerger of Apparel brands on Thursday afternoon

• +5.0% AMP (AMP) – Morgan Stanley flagged the company as their preferred play in the Australian wealth management sector, citing ~12x underlying FY25e PE and over 35% FY23-25e EPS growth as a compelling case

• +3.2% Wesfarmers (WES) – Goldman Sachs upgraded the company to Neutral from Buy, citing several new growth drivers such as Bunnings market share gains, eCommerce/website growth and scaling of its lithium and healthcare businesses

• +1.0% Clarity Pharmaceuticals (CU6) – Received US FDA Fast Track Designation for its Cu64 SAR-bisPSMA, a treatment for biochemical recurrence of prostate cancer.

Trading lower

• -15.2% Kogan (KGN) – Reported weaker-than-expected preliminary 1H25 earnings, adjusted EBIT was up 21.2% to $19.0m vs. Citi estimates of $21.4m or 11.2% miss

Broker Moves

• AMP retained Overweight; target up to $1.90 from $1.70 (MS)

• Ampol retained Buy; target price cut by 1% to $32.0 (GS)

• Challenger retained Equal-weight; target cut to $6.60 from $6.80 (MS)

• Netwealth upgraded to Neutral from Sell; target up to $30.7 from $28.9 (CITI)

• Regis Resources retained Outperform; target up to $3.50 from $3.40 (MQG)

• Santos retained Buy; target price up 2% to $7.90 (GS)

• Treasury Wine retained Buy; target down to $13.0 from $15.2 (GS)

• Wesfarmers upgraded to Buy from Neutral; target up to $78.7 from $69.5 (GS)

• Worley retained Outperform; target cut to $17.83 from $17.92 (MQG)

Scans