Market Wraps

Evening Wrap: ASX 200 rallies on RBA's dovish remarks, Morgan Stanley downgrades banks' outlook

Tue 07 Mar 23, 5:03pm (AEST)

The S&P/ASX 200 closed 36 points higher, up 0.49%. 

The RBA hiked rates by 25 bps but with a dovish lean, the ASX 200 extends its winning streak to four, InvoCare rallies 35% after receiving an unsolicited takeover from TPG, Megaport shares tank after its CEO resigns, Morgan Stanley expects major banks to underperform the market in 2023 and Macquarie says pent-up revenge travel demand has 'yet to be completely realised'.

Let's dive in.


Today in Review

Tue 07 Mar 23, 4:58pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,364.7 +0.49%
All Ords 7,562.6 +0.49%
Small Ords 2,891.6 +0.22%
All Tech 2,218.5 +0.38%
Emerging Companies 2,137.2 -0.10%
Currency
AUD/USD 0.6709 -0.31%
US Futures
S&P 500 4,059.75 +0.18%
Dow Jones 33,483.0 +0.10%
Nasdaq 12,359.5 +0.29%
Name Value % Chg
Sector
Energy 11,365.8 +1.21%
Consumer Discretionary 3,037.2 +1.12%
Consumer Staples 13,340.7 +0.95%
Financials 6,424.6 +0.91%
Health Care 43,236.4 +0.75%
Communication Services 1,477.6 +0.50%
Real Estate 3,184.2 +0.47%
Industrials 6,638.4 +0.47%
Information Technology 1,528.4 +0.28%
Utilities 8,172.0 +0.24%
Materials 18,675.5 -0.44%

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ASX 200 Session Chart

2023-03-07 16 29 19-S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
The markets moved higher after a choppy open and surged following the RBA rate hike (Source: Market Index)

Markets

The ASX 200 rallied after the RBA hiked rates by the expected 25 bps. The commentary acknowledged that high inflation was only temporary and had already peaked. Now, we just need to make it past Powell’s speech, US inflation and FOMC minutes.

  • Energy outperformed as oil is now on a six-day winning streak, up 6.5%

  • Discretionary rallied thanks to gains from retailers including Super Retail Group (+2.6%), Wesfarmers (+1.7%) and Harvey Norman (+1.2%)

  • Materials continue to struggle for upside amid weakness from South 32 (-2.4%), BHP (-1.0%) and Rio Tinto (-0.35%)

Economy

Australia’s trade surplus fell more than expected in January to $11.69bn from $12.99bn in December and below expectations of $12.5bn.

  • A small increase in exports was offset by a spike in imports for automobile and transport equipment 

The RBA hiked interest rates by 25 bps to 3.60%, in-line with market expectations. It made a bold statement that 'inflation has peaked' and tweaked its guidance language from 'further increases ...' to 'expects tightening ... will be needed'. Commentary took a dovish lean in acknowledging the slowdown across the economy and pressures on the household sector. Some key quotes include:

  • “The monthly CPI indicator suggests that inflation has peaked in Australia.”

  • “Goods price inflation is expected to moderate over the months ahead due to both global developments and softer demand in Australia.”

  • “Growth over the next couple of years is expected to be below trend.”

  • “The Board expects that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary.”


Latest news


Interesting news and movers

Trading higher

  • +35% InvoCare (IVC) – Takeover offer from TPG

  • +9.8% Myer (MYR)

  • +8.7% Pushpay (PPH) – Bounce after -10% in last three

  • +5.4% Weebit Nano (WBT) – Bounce after -13.5% in last three

  • +4.3% Sayona Mining (SYA) – $54.9m flow-through shares raising at premium

  • +3.0% Orora (ORA)

Trading lower

  • -15% Megaport (MP1) – CEO resignation

  • -7.6% Brainchip (BRN)

  • -5.3% Ioneer (INR)

  • -3.8% Liontown Resources (LTR) – Pullback after +22.4% in last three

  • Uranium sector move: Boss Energy (-4.3%), Paladin Energy (-3.5%) and Deep Yellow (-3.0%)


Broker updates 

Morgan Stanley says the tailwinds that drove the EPS upgrade cycle for banks over the past year has run its course, making it more likely for majors to underperform the ASX 200 in 2023. Some key catalysts for this view include: Margins now peaking, margins set to decline in FY24, no near-term catalysts for better loan growth, rising loan losses and no change in approach to costs.

  • Westpac Bank: Overweight with $23.70 target price 

  • ANZ Group: Equal-weight with $26.20 target price

  • NAB: Equal-weight with $30.00 target price 

  • Commonwealth Bank: Underweight with $85.00 target price

Macquarie reviews global domestic and international airline trends in regions relevant to its coverage. January 2023 capacity in North America leads all key regions at 102% vs. Asia at 89%, Europe and ANZ at 87%. Results ASX-listed half-year results downplayed macro risks and Australia’s consumer spending on travel suggests pent-up revenge demand is “yet to be completely realised.”

  • Corporate Travel: Neutral with $17.44

  • Flight Centre: Outperform with $21.30

  • Webjet: Outperform with $6.82

  • Qantas: Outperform with $7.40


Scans

Top Gainers

Code Company Last % Chg
IVC Invocare Ltd $12.02 +34.30%
HCD Hydrocarbon Dynam... $0.014 +27.27%
SRN Surefire Resource... $0.019 +26.67%
MDX Mindax Ltd $0.082 +26.15%
APC Australian Potash... $0.021 +16.67%
View all top gainers

Top Fallers

Code Company Last % Chg
BVS Bravura Solutions... $0.39 -54.12%
G88 Golden Mile Resou... $0.014 -22.22%
ESR Estrella Resource... $0.012 -20.00%
ASQ Australian Silica... $0.051 -17.74%
8IH 8I Holdings Ltd $0.025 -16.67%
View all top fallers

52 Week Highs

Code Company Last % Chg
IGRO Ishares High Grow... $27.00 +5.80%
AIQ Alternative Inves... $1.40 +4.48%
AX1 Accent Group Ltd $2.415 +4.10%
ADT Adriatic Metals Plc $3.61 +1.98%
KSC K & S Corporation... $2.31 +1.32%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
BVS Bravura Solutions... $0.39 -54.12%
PRL Province Resource... $0.041 -24.07%
G88 Golden Mile Resou... $0.014 -22.22%
8IH 8I Holdings Ltd $0.025 -16.67%
SES Secos Group Ltd $0.06 -14.29%
View all 52 week lows

Near Highs

Code Company Last % Chg
WVOL Ishares Edge MSCI... $35.13 +0.66%
STX Strike Energy Ltd $0.393 +0.64%
WBCPI Westpac Banking C... $103.95 -0.05%
PMGOLD Gold Corporation $27.46 +0.22%
VVLU Vanguard Global V... $64.46 -0.17%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
OBL Omni Bridgeway Ltd $2.77 -5.14%
EOL Energy One Ltd $3.76 -0.27%
PSQ Pacific Smiles Gr... $1.14 -0.87%
COB Cobalt Blue Holdi... $0.383 -1.92%
AMP AMP Ltd $1.038 +0.24%
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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