Market Wraps

Evening Wrap: ASX 200 rallies on solid CBA earnings, China slips into deflation

Wed 09 Aug 23, 5:14pm (AEST)

The S&P/ASX 200 closed 27 points higher, up 0.37%. 

The Index rallied off the back of CBA's solid FY23 results, China's inflation rate dips into negative territory for the first time since covid, TPG is set to acquire InvoCare, Suncorp posts a solid full-year result but its dividend was well-below consensus expectations and Goldman's take on yesterday's results (Coronado Global and James Hardie).

Let's dive in.


Today in Review

Wed 09 Aug 23, 4:31pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,338.0 +0.37%
All Ords 7,543.4 +0.32%
Small Ords 2,835.4 -0.06%
All Tech 2,584.6 +0.86%
Emerging Companies 2,055.0 -1.18%
Currency
AUD/USD 0.6558 +0.21%
US Futures
S&P 500 4,524.25 +0.13%
Dow Jones 35,411.0 +0.05%
Nasdaq 15,386.0 +0.21%
Name Value % Chg
Sector
Financials 6,461.7 +1.21%
Communication Services 1,592.4 +0.95%
Information Technology 1,931.2 +0.87%
Industrials 6,894.6 +0.51%
Consumer Staples 13,152.5 +0.18%
Materials 18,080.9 +0.17%
Consumer Discretionary 3,075.4 +0.09%
Energy 11,833.7 +0.04%
Utilities 8,836.0 -0.27%
Real Estate 3,072.1 -0.72%
Health Care 39,306.4 -0.89%

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ASX 200 Session Chart

S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
ASX 200 rallies intraday to finish near session highs (Source: Market Index)

Markets

The ASX 200 finished higher and near best levels thanks to a solid FY23 result from Commonwealth Bank (+2.6%). Tech continued to catch bid, with the S&P/ASX 200 Info Tech Index less than 0.1% off recent highs. The rest of the market was relatively choppy, with Defensives sectors like Utilities, Real Estate and Healthcare finishing lower. The Index was saved by Commbank's results while the rest of the market remained relatively choppy, that's what happens when the Index is so concentrated towards a few banks and miners. The next major catalyst for markets is US inflation (Thursday at 10:30 pm).

CBA result in a nutshell: Its cash profit was in-line with expectations, net interest margins saw a sequential 5 bp decline in the second half as competition offset higher rates. Outlook commentary flagged downside risks to economic growth due to the lagged effects of rate hikes. Analysts were impressed by the final dividend, which was up 17% year-on-year as well as the new $1bn on-market buyback. Mortgage delinquencies experienced a slight uptick but balance sheet remained strong.

Economy

China’s inflation rate fell into negative territory in July, down 0.3% year-on-year from 0% in June but above analyst expectations of -0.4%. 

China’s producer price index improved to -4.4% in July from -5.4% in June. Here are some key analyst takeaways from Reuters:

  • "With destocking and credit expansion, we expect PPI and CPI will rebound from the bottom in the fourth quarter. China launched intensive stimulus measures after the July politburo meeting, it will take time to reflect.” – Tao Chaun, Soochow Securities

  • "Market needs to see more actionable support measures from the Chinese authorities to stay upbeat. While there is room for some mild monetary policy easing, the onus is on the fiscal side.” – Frances Cheung, OCBC Bank

  • "Both CPI and PPI are in deflation territory. The economic momentum continues to weaken due to lacklustre domestic demand. It is not clear at this stage if the policies announced recently can turn around the economic momentum soon.” – Zhiwei Zhang, Pinpoint Asset Management


Latest news


Interesting news and movers

Trading higher

  • +10.7% Bowen Coking Coal (BCB) – Resource upgrade

  • +10.6% Adriatic Metals (ADT) – Upsized placement (Tue)

  • +8.3% Next Science (NXS) – Pilot study results

  • +5.9% InvoCare (IVC) – TPG to acquire IVC

  • +3.9% Nanosonics (NAN) 

  • +2.6% CommBank (CBA) – FY23 results

  • +2.4% Westgold Resources (WGX) – Board approvals mine development

  • +1.6% Syrah Resources (SYR) – Non-binding MoU with Samsung

  • Coal sector move: Coronado Global (+4.8%), Terracom (+3.8%), Whitehaven Coal (+2.3%), New Hope (+2.2%)

Trading lower

  • -22.2% Renascor Resources (RNU) – Siviour BAM study results (Tue)

  • -21.4% Panotro (PNR) – Placement

  • -12.7% Delta Lithium (DLI)

  • -8.2% Electro Optic Systems (EOS) – Ceases Satellite Manufacturing Hub

  • -7.6% Kogan (KGN)

  • -4.4% Aeris Resources (AIS)

  • -4.3% Lovisa (LOV) – Downgraded by Macquarie

  • -1.5% Suncorp (SUN) – FY23 earnings


Broker notes

UBS’ take on today’s results:

Commonwealth Bank (CBA) – Neutral with $100.00 target ($102.21 at 8 Aug close) 

  • “We view this as a clean result with the better-than-expected dividend and $1B buy-back a positive surprise relative to UBS estimates.”

  • “Credit trends and asset quality across the bank and its divisions still looks healthy with a 13 bps BDD / GLA charge in H2 23 (as expected).”

  • “The DPS per share of 240 cents in H2 23 was stronger than forecast too, with a ~4.8% beat to VA consensus (+5.5% to UBSe).”

  • "CBA is trading at 2.2x estimated P/BV, slightly above historical avg, and P/E (2-yrs fwd) of ~17.6x, above its historical +1st dev.”

Suncorp (SUN) – Buy with $15.00 target ($13.75 at 8 Aug close)

  • “Cash NPAT in line but GI and Bank both miss. Guidance softer. Dividend bottom end of payout.”

  • “Overall Australia was ahead of consensus (and UBSe) whilst NZ and Bank were both behind.”

  • “The Bank has delivered on its FY23 mid-term target CTI but FY24 guidance is disappointing in the mid 50s (consensus 52%).”

Plus Goldman’s notes on yesterday’s results:

Coronado Global (CRN) – Buy with $2.20 target ($1.52 at 9 Aug close)

  • “CRN reported in-line 1H 2023 underlying EBITDA/NPAT of US$352mn/US$199mn with the result largely pre-reported.”

  • “CRN declared a US0.5cps interim dividend (well below our US3.7cps estimate), equating to just 7% of FCF for 1H23, but did reaffirm its capital management framework to return 60-100% of FCF over the full year.”

  • “We remain constructive on met coal in 2023 due to ongoing risks around supply; the EU ban on Russian coal, ongoing mine supply issues in Australia & Canada.”

James Haride (JHX) – Buy with $51.70 target ($46.50 at 9 Aug close)

  • “NPAT was 20% ahead of GSe with EBIT 21% higher. All operating segments were higher than expected, with North America accounting for ~75% of the operating earnings EBIT.”

  • “FY24 volume outlook suggests increased management confidence in the macro backdrop.”

  • “We have lifted our FY24e earnings estimates by ~15%. Within this, largely driven by the North America segment, we’ve increased our segment volumes forecast by 7%, albeit this translates to a 14% upgrade to EBIT.”


Scans 

Top Gainers

Code Company Last % Chg
PEC Perpetual Resourc... $0.032 +45.46%
IR1 Iris Metals Ltd $2.21 +42.58%
PET Phoslock Environm... $0.028 +27.27%
AGR Aguia Resources Ltd $0.024 +26.32%
BMM Balkan Mining and... $0.22 +25.71%
View all top gainers

Top Fallers

Code Company Last % Chg
RNU Renascor Resource... $0.135 -25.00%
FRS Forrestania Resou... $0.08 -23.81%
TZL TZ Ltd $0.023 -23.33%
PNR Pantoro Ltd $0.054 -22.86%
BME Black Mountain En... $0.021 -19.23%
View all top fallers

52 Week Highs

Code Company Last % Chg
AW1 American West Met... $0.35 +18.64%
SSL Sietel Ltd $8.50 +13.33%
BIO Biome Australia Ltd $0.135 +8.00%
FCL Fineos Corporatio... $2.73 +7.06%
IMR Imricor Medical S... $0.625 +6.84%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
RNU Renascor Resource... $0.135 -25.00%
OXT Orexplore Technol... $0.041 -18.00%
CF1 Complii Fintech S... $0.03 -16.67%
SCT Scout Security Ltd $0.015 -16.67%
ZNC Zenith Minerals Ltd $0.071 -16.47%
View all 52 week lows

Near Highs

Code Company Last % Chg
AN3PI Australia and New... $104.60 -0.34%
PCI Perpetual Credit ... $1.035 +0.98%
WVOL Ishares Edge MSCI... $36.54 -0.46%
WBCPI Westpac Banking C... $103.10 -0.45%
GCI Gryphon Capital I... $1.98 -0.25%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
SDG Sunland Group Ltd $1.035 +0.49%
SBM ST Barbara Ltd $0.215 -2.27%
STA Strandline Resour... $0.17 -2.86%
LNK Link Administrati... $1.48 +2.42%
MAF Ma Financial Grou... $4.28 -1.38%
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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