Market Wraps

Evening Wrap: ASX 200 rallies for a sixth straight session, Woodside fades OPEC production cuts

Mon 03 Apr 23, 5:08pm (AEST)

The S&P/ASX 200 closed 45 points higher, up 0.63%.

The local sharemarket extends gains for a sixth straight session, Australian new loan commitments for housing falls 33% from January 2022 highs, Woodside struggles to hold onto session highs even after oil prices jump 5% on OPEC's production cuts and Macquarie's take on the local banking landscape and tin markets.

Let's dive in.


Today in Review

Mon 03 Apr 23, 5:01pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,223.0 +0.63%
All Ords 7,416.4 +0.59%
Small Ords 2,840.6 +0.61%
All Tech 2,239.7 +1.23%
Emerging Companies 2,125.2 +0.07%
Currency
AUD/USD 0.6672 -0.20%
US Futures
S&P 500 4,128.0 -0.24%
Dow Jones 33,491.0 +0.09%
Nasdaq 13,222.75 -0.59%
Name Value % Chg
Sector
Energy 10,691.1 +2.25%
Real Estate 3,043.8 +1.92%
Information Technology 1,540.4 +1.91%
Consumer Discretionary 3,055.7 +1.86%
Industrials 6,660.6 +0.99%
Health Care 43,019.7 +0.87%
Financials 6,181.1 +0.83%
Utilities 8,437.1 +0.81%
Consumer Staples 13,348.1 +0.28%
Communication Services 1,518.6 +0.17%
Materials 18,376.7 -0.71%

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ASX 200 Session Chart

ASX 200 intraday chart
ASX 200 eases from a session high of 0.95% (Source: Market Index)

Markets

The ASX 200 is up for a sixth straight session, up 3.85%.

  • Energy stocks gapped up after OPEC+ announced a surprise output cut

  • Real Estate firmer and up 4.6% from 24 March lows

  • Tech continues to benefit from Nasdaq outperformance, up 4.8% in the last four sessions

  • Materials eased after iron ore majors rallied 2.5% to 4% last Friday

Economy

Australian new loan commitments for housing fell 0.9% month-on-month to $22.6 billion in February.

  • “Housing finance continued to decline from the record highs in January 2022, with the total value of new loan commitments falling 33 per cent since then.” – Dane Mead, ABS Head of Finance and Wealth

  • “Owner-occupier first home buyer lending continued to decline from the high reached in January 2021, to the lowest level seen since May 2017. It was also 27 per cent lower than February 2020, prior to the COVID-19 pandemic.” 

Australian building permits rose 4.0% month-on-month in February after a 27.1% dip in January.

  • "This increase was driven by an 11.3 per cent rise in approvals for private sector houses, after a 10-year low in January. The result remains 13.6 per cent lower than February 2022.” – Daniel Rossi, Head of Construction Statistics 

  • “Total dwelling approvals have continued their downward trend since September 2022, following the conclusion of government stimulus and rising interest rates."

China’s Caixin Manufacturing PMI fell to 50.0 in March from 51.6 in February.

  • February was an eight-month high and signals a moderation in activity

  • You might have noticed that China has two PMI surveys: NBS and Caixin. The Caixin index focuses on smaller firms, while the official NBS tracks larger companies 


Latest news


Market Insights

Market mood: Overextended, eyes on a pullback

That's quiet a relief rally we've got on our hands. But as we get more and more extended, the focus should turn to the pullback. If you've been reading my wraps for a while, you'll know exactly what I say, because I say pretty much the same thing every single time. In summary:

  • The ASX 200 is rallying into a key trendline.

  • In the event of some weakness, what does the pullback look like?

  • Do we get a constructive pullback into the 50-day or 200-day, that's less volatile and met with buying support?

  • Or do we see the all-too-familiar selloff where volatility picks up, the market fails to hold and eventually gets pummeled

XJO chart
ASX 200 chart (Source: TradingView)

OPEC's production cut: Fade the news, price implications

OPEC+ unexpectedly cut oil production by 1.2 million barrels per day earlier today, triggering a ~5% rally for oil prices.

The news was pretty fresh, so I thought local energy stocks would gap up and trend higher. Turns out, the opposite happened.

Woodside rallied 5.0% as the market opened, hit session highs of 5.9% and faded to a 2.7% close.

Woodside Energy Group Ltd (ASX WDS) Share Price - Market Index
Woodside intraday chart (Source: Market Index)

Interestingly, the oil price actually drops on average 1, 3 and 6 months after the production cut. The largest cuts in the past 20 years were during recessions and typically a sign of demand weakness.

On the flip side, production hikes typically see higher prices, when the oil cartel perceive demand being strong enough that additional supply won't hurt prices.

FsvCN15X0AERZiG
Source: Macro Pabst

Interesting news and movers

Trading higher

  • +29.6% PPK (PPK)

  • +18.2% Jervois Global (JRV) – Chairman purchases 3.7m shares

  • +8.0% Tyro Payments (TYR) – Potentia can buy TYR for $1.80-2.00 per share

  • +7.8% Lake Resources (LKE) – Testing confirms >99.8% purity for Kachi Project

  • +7.7% PYC Therapeutics (PYC) - Drug program progressing to human trials

  • +6.5% Karoon Energy (KAR) – FY23 production guidance

  • Travel sector move: Corporate Travel (+5.4%), Webjet (+2.7%)

  • Energy sector move: Woodside (+2.8%), Santos (+2.8%)

  • Tech sector move: Wisetech (+2.3%), Altium (+2.3%), Technology One (+2.1%)

Trading lower

  • -15.1% Nuix (NXL) – Pullback after +20% in last three sessions

  • -9.1% MetalsX (MLX) - Macquarie expects tin market surplus in 2023

  • -7.5% Netwealth Group (NWL) – Third quarter and full-year FUM guidance

  • -5.2% Syrah Resources (SYR)

  • -1.3% Dacian Gold (DCN) – Indefinite suspension of Mt Morgans

  • Gold sector move: Ramelius (-7.1%), Bellevue Gold (-4.7%), Perseus (-3.9%)

  • Lithium sector move: Winsome (-8.5%), Patriot Battery Metals (-7.8%), Pilbara Minerals (-3.6%)


Broker updates

Macquarie on Australia banks 

  • “Current margin trends continue to favour business over retail franchises, but volumes are slowing across the board with SME growth turning negative.”

  • “With front book spreads ~80-90bps below FY21 levels and rising book churn, the outlook for mortgage margins remains challenging.”

  • “TD rates increased materially in recent months, suggesting potential downside risk to our already “conservative” FY24 margin forecasts.” 

  • “Bank valuations appear more supportive following ~8% YTD derating relative to the market.”

  • “We see Australian banks as defensive but expensive in a global context and remain Underweight the sector on the medium-term view.”

Macquarie on tin:

  • Tin prices experienced a dramatic selloff from 2022 highs of US$48,650/t to lows of almost US$15,000/t. Prices bounced strongly last January to US$32,000 before taping off to the US$25,000 level this year. 

  • “Estimated demand fell 2.1% YoY as consumption from soldering and tinplate sectors waned … the market is likely to have been in surplus through much of H2 and we expect a full year surplus of 5kt in 2023.”

  • “This surplus is expected to persist in 2024 before the market drifts back towards progressively larger deficits.” 


Scans

Top Gainers

Code Company Last % Chg
OLY Olympio Metals Ltd $0.18 +63.64%
OD6 OD6 Metals Ltd $0.303 +47.56%
PPK PPK Group Ltd $1.225 +29.63%
LER Leaf Resources Ltd $0.018 +28.57%
BML Boab Metals Ltd $0.25 +28.21%
View all top gainers

Top Fallers

Code Company Last % Chg
TMG Trigg Minerals Ltd $0.017 -32.00%
EMP Emperor Energy Ltd $0.018 -21.74%
PYR Payright Ltd $0.016 -20.00%
TFL Tasfoods Ltd $0.028 -20.00%
VRX VRX Silica Ltd $0.10 -20.00%
View all top fallers

52 Week Highs

Code Company Last % Chg
ALA Arovella Therapeu... $0.047 +6.82%
IHR Intellihr Ltd $0.245 +6.52%
LAU Lindsay Australia... $0.995 +5.85%
MDX Mindax Ltd $0.135 +3.85%
WEB Webjet Ltd $7.21 +2.71%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
TMG Trigg Minerals Ltd $0.017 -32.00%
DC2 DC Two Ltd $0.022 -18.52%
ETM Energy Transition... $0.038 -15.56%
8VI 8VI Holdings Ltd $0.50 -14.53%
AJL AJ Lucas Group Ltd $0.022 -12.00%
View all 52 week lows

Near Highs

Code Company Last % Chg
OZBD Betashares Austra... $45.08 -0.27%
PCI Perpetual Credit ... $0.98 -1.01%
WVOL Ishares Edge MSCI... $35.98 +1.18%
CHN Chalice Mining Ltd $7.27 -2.94%
GCI Gryphon Capital I... $1.935 -1.78%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
CHC Charter Hall Group $11.27 +2.46%
HVN Harvey Norman Hol... $3.69 +3.07%
RHY RHYTHM Bioscience... $0.46 +1.10%
CMW Cromwell Property... $0.57 +2.70%
LFSPA Latitude Group Ho... $89.10 -1.62%
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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