Evening Wrap: ASX 200 jumps as tech stocks rally, China's manufacturing unexpectedly contracts

The S&P/ASX 200 closed 71 points higher, up 1.05%.

The local sharemarket rallied thanks to a solid session from Wall Street, Australian retail sales advanced for a ninth straight month and China's manufacturing services unexpectedly slipped into contraction.

Let's dive in.

Markets

The ASX 200 closed towards session highs after a brief intraday pullback (from session high of 1.2% to 0.6% in the afternoon) from after China's manufacturing and services PMIs unexpected fell into contraction territory.

• Growth heavy sectors headlined gains

• Defensive sectors also led to the upside

• Energy and Materials underperformed as commodity prices weakened under a strong US dollar and poor GDP growth figures from Europe

• 75% of the top 200 advanced

Economy

Australia retail sales rose 0.6% month-on-month in September from 0.6% in August

• The ninth consecutive rise following a 1.3% in July, 0.2% in June and 0.7% in May

• “This month’s rise was again driven by the combined strength in the food industries. Food retailing rose 1.0 per cent, while cafes, restaurants, and takeaway food services rose 1.3 per cent,” said Ben Dorber, ABS Head of Retail Statistics 

• “Many retailers remained open for the National Day of Mourning, an additional one-off public holiday in September, and this boosted spending on food, alcohol and dining out.”

China’s manufacturing PMI was 49.2 in October from 50.1 in September

•  The 50 point level separates expansion from contraction

• Services PMI also unexpectedly deteriorated to 48.7 in October from 50.6 in September

Commodities

"A slew of weak economic data combined with a stronger USD created an uncertain backdrop for commodities. Energy led the sector lower, while bulks were also down sharply," said ANZ senior commodity strategist, Daniel Hynes.

• Iron ore futures on Dalian Commodity Exchange fell -3.2%

Latest news

Post market brief

The ASX 200 managed to close at intraday highs after a week of struggling to do so.

Tech and Discretionary sectors rallied after a strong risk-on session on Wall Street alongside strong performances from defensive sectors. We're heading into a pretty big week in terms of economic developments, most notably the RBA and Fed interest rate decision. Which could set off some fireworks for markets.

The ASX 200 rallied 3.48% on 4 October after the RBA raised by a smaller-than-expected 25 bps.

Index

S&P/ASX 200: A strong close after 6 days of choppy action.

XJO chart (Source: TradingView)

Major announcements

It felt like the entire ASX decided to release their 4C’s today. 

Large caps (>$1bn)

• Imugene (ASX: IMU) +6.1% dosed its first patient for its novel cancer-killing virus CF33-hNIS within its intratumoral cohort 2 of the trial 

• Lake Resources (ASX: LKE) +7.6% posted its September quarter report. The company had $158.8m cash and no debt as at 30 September 

• Nickel Industries (ASX: NIC) +4.3% 20,275 tonnes of nickel production in the September quarter, which generated US$45.3m in EBITDA (down from US$84.9 in the June quarter) 

• Core Lithium (ASX: CXO) +3.4% posted its September quarter report. The company had $95.5m cash and said offtake negotiations are continuing with “globally significant parties” 

• Liontown Resources (ASX: LTR) +3.4% another September quarter report. The company had $420m cash at quarter end 

• Stanmore (ASX: SMR) +2.9% provided a resource update for its mines South Walker Creek, Poitrel and Wards Well

• Origin (ASX: ORG) +2.9% said “market conditions have improved following the incredibility challenging June quarter,” and reported 64% YoY growth in Australia Pacific LNG for the September quarter  

• Dicker Data (ASX: DDR) +2.1% reported 29.9% YoY revenue growth to $2.23bn but only a 0.1% rise in net operating profit before tax to $76.7m for the 9 months to 30 September

• Deterra Royalties (ASX: DRR) -1.9% posted 50.9% in iron ore and mineral sands royalties for the September quarter, down -55% compared to the previous quarter due to lower iron ore prices and sales volumes

Mid-to-small caps

• Nitro Software (ASX: NTO) +20.2% said the recent takeover offer from Potentia Capital undervalues the company and advised shareholders to reject the $1.80 per share offer  

• Bubs (ASX: BUB) -13.8% posted 28% revenue growth to $23.6m in 1Q23 but losses came in at -$7.9m due to rising manufacturing costs  

• Aeris Resources (ASX: AIS) -18% reaffirmed its full-year production and cost guidance for zinc, silver and iron ore production

Broker updates 

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