Evening Wrap: ASX 200 holds up, China and Taiwan tensions run high, BHP goes ex-div on Thursday

The S&P/ASX 200 closed 12 points lower, down -0.16%.

The local sharemarket is holding up pretty well all-things considered, iron ore prices extend losses on mixed Chinese economic data, Webjet expects to exceed pre-pandemic earnings in FY24 and uranium stocks keep on rallying.

Let's dive in.

ASX 200, All Ords and All Tech intraday overview

Markets

• 5 out of 11 sectors advanced

• Tech stocks led gains as names like Block, Xero, Altium and NextDC rallied more than 2%

• Energy stocks underperformed following an almost -5% dip in oil prices overnight

• Materials also struggled as Singapore iron ore futures hit year-to-date lows below US$100

• 51% of the top 200 companies advanced

Stocks

• Mesoblast (ASX: MSB) +8.9% posted an FY22 loss of -US$91m (FY21: -US$98.8m). Underlying cash position of US$105.5m after US$45m capital raise in August 

• Webjet (ASX: WEB) +8% said bookings are currently tracking at 95% of pre-pandemic levels and expects cash surplus from ops of $100m in the first-half of FY23

  • Webjet Managing Director: “... we have full confidence that earnings margins will expand beyond pre-pandemic levels as the business continues to scale.”

  • Webjet expects to exceed pre-pandemic earnings in FY24, 'well ahead of when the broader travel market is anticipated to return to 2019 levels.

• Dicker Data (ASX: DDR) -1.5% successfully completed a $50m capital raise at $10.30, a 10.3% discount to its last close price

  • Proceeds will be used to fund the expansion of its Kurnell warehouse, increase warehouse capacity and provide balance sheet flexibility

• Harvey Norman (ASX: HVN) -2.3% profits fell -3.6% in FY22 as Delta-related lockdowns negatively impacted first-half sales, down -23.7% 

  • Harvey Norman; “The first start of FY23 has been solid sales results,” with Australian franchises up 10.7% in the first eight weeks of FY23 

• Nickel Industries (ASX: NIC) -3.4% posted 43% profit growth in the first-half

  • Nickel Industries: “Significantly higher realised prices outpaced cost increases to deliver material margin expansion.” 

• Pointsbet (ASX: PBH) -11.9% losses accelerated 43% to -$268m in FY22. Betting turnover rose 32% to $5bn and active US cash clients rose 67% to ~266,000 

• DGL Group (ASX: DGL) -35.7% posted triple digit earnings growth in FY22 but “anticipates its earnings growth to flatten in FY23”

  • In parallel, the chemicals and waste company announced four acquisitions for the purchase price of $26m, expected to contribute $7m in EBITDA 

Economy

• Australian construction work done fell -3.8% QoQ in the June quarter from -0.3% in the March quarter

  • Consensus expected an increase of 0.6% 

• China NBS Manufacturing PMI was 49.4 in August from 49.0 in July

  • Ahead of consensus expectations of a decline to 48.5

• China NBS Services PMI was 52.6 in August from 53.8 in July

  • Slight ahead of consensus expectations of 52.0

  • As a whole (manufacturing and services) PMIs were stronger-than-expected even amid ongoing covid disruptions, an extreme heatwave and energy crisis 

Commodities 

• Iron ore futures on China’s Dalian Commodity Exchange fell -2.2% 

  • Chinese steel PMIs jumped 13.1 points to 46.1 in August

  • In simple terms: Bounced from deep contraction to just an ordinary contraction

  • New export order PMIs recovered to 51.6

Scans

Latest news

Post market charts

S&P/ASX 200: The local sharemarket is holding up surprisingly well, down around -1.8% in the last three sessions whereas the S&P 500 is on a three-day skid, down -5.1%. The ASX 200 bounced off session lows of -0.87% as miners bounced (but still red) and the Big Four banks all closed higher. What’s good is that the market is really defending the lows established last Tuesday and this Monday. Still, the market is in a volatile place and we're heading into the seasonally weak month of September.

Source: TradingView, Annotations by Market Index

S&P/ASX 200 Energy: As mentioned in the Morning Wrap, oil markets have very much behaved like a pendulum since the Russian invasion. “It'll swing towards the tight supply narrative for a few days or weeks and then swing back to the demand destructive and recession narrative the next.” The Jackson Hole inspired pullback has placed oil at an inflection point. As such, we’re seeing the ASX 200 Energy Index give back some gains. It’s still 2.9% above its 20-day moving average.

S&P/ASX 200 Info Tech: A bit of a channel forming.

Source: TradingView, Annotations by Market Index

Stocks and sectors

Uranium in full throttle: Uranium has been the most whipsaw sector to watch in the last few days. It rallies and gaps up on the Japan and India news. Reverses those gains. Rallies back some of those gains and on Wednesday, back to last week’s highs. The big difference today was more broad-based buying, with previous large cap laggards like Paladin Energy (ASX: PDN) and Boss Energy (ASX: BOE) rallying strongly. And those smaller cap names like Alligator (ASX: AGE), Aurora Energy (ASX: AEE) and 92 Energy (ASX: 92E) ripping even higher.

Alligator price chart (Source: TradingView)

Growth showing some resilience: Several growth names from Wisetech Global (ASX: WTC) through to Core Lithium (ASX: CXO) are holding up relatively well amid a rough market.

Core Lithium price chart (Source: TradingView)

Food for thought

BHP goes ex-dividend tomorrow: BHP will go ex-divvy tomorrow for US$1.75 (A$2.54). At today's close of $40.60, that's a 6.25% dividend yield (or drop tomorrow).

China and Taiwan tensions brewing: Taiwan's Defence Ministry said a few things that might spice up the tensions between the two 'countries'. Notes and quotes from Reuters:

• China's intention of making Taiwan Straight its 'inner sea' would become a main source of instability in the region

•  Taiwan will exercise its right to self defence and counter-attack if PLA forces enter air and sea territory within 12 nautical miles of Taiwan

• Same as above if any Chinese drones do not leave Taiwan's territory after warnings and if they pose a threat to security