Market Wraps

Evening Wrap: ASX 200 rallies to a five month high, resources bounce, US futures flat

Tue 22 Nov 22, 4:46pm (AEST)

The S&P/ASX 200 closed 42 points higher, up 0.59%.

The local sharemarket rallied to a five month high as resources bounced back, Goldman Sachs remains bullish on oil's medium to long-term outlook and Australian consumer confidence inches higher from dire levels.

Let's dive in.


Today in Review

Tue 22 Nov 22, 4:17pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,181.3 +0.59%
All Ords 7,376.4 +0.56%
Small Ords 2,872.5 +0.39%
All Tech 2,085.4 +0.25%
Emerging Companies 2,200.6 -0.01%
Currency
AUD/USD 0.6623 +0.29%
US Futures
S&P 500 3,962.25 +0.11%
Dow Jones 33,742.0 +0.02%
Nasdaq 11,603.75 +0.14%
Name Value % Chg
Sector
Energy 11,591.6 +2.64%
Materials 17,202.2 +1.15%
Information Technology 1,460.5 +0.96%
Real Estate 3,074.5 +0.36%
Financials 6,548.9 +0.31%
Health Care 42,731.5 +0.30%
Communication Services 1,418.5 +0.25%
Consumer Discretionary 2,926.6 +0.08%
Utilities 8,353.5 -0.07%
Consumer Staples 12,830.3 -0.29%
Industrials 6,442.6 -0.31%

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Markets

The ASX 200 rallied to a fresh five month high as Resource sectors bounced back.

  • Energy led to the upside after oil reversed a -6.2% decline last night

    • Goldman Sachs downgraded its December quarter oil outlook by US$10 to US$100 a barrel but viewed this dip as an opportunity to "add length on yet another speed bump that will come to pass

  • Materials also bounced with heavyweights BHP and Rio Tinto closing around 1.0% higher

  • Technology shares trended higher with a notable 5.3% gain from Technology One following a robust full-year result

  • Defensive and Discretionary sectors underperformed benchmarks

  • 118 of the top 100 advanced (59%)

Economy

Australian consumer confidence rose 1.0% to 81.6 for the week ending 20 November, according to ANZ.

  • Consumer confidence levels are still sitting near covid and GFC levels

  • "Weekly inflation expectations" fell 0.2 percentage points to 6.3%

  • "Current financial conditions" fell 3.6%, falling to its lowest since the start of the pandemic

  • "Time to buy a major household item" rebounded 9.2%, after a cumulative decline of 13% over the previous six weeks

  • "Critically, though, ANZ-observed spending data suggests that consumer spending has stayed strong, with spending momentum similar to pre-pandemic levels," - ANZ Head of Australian Economics, David Plank

Commodities 

"Concerns over rising COVID-19 cases in China weighed on sentiment across commodity markets. This was exacerbated by a stronger USD amid uncertainty over the Fed’s tightening pace," said ANZ senior commodity strategist, Daniel Hynes.

  • Iron ore futures fell -0.2% to US$92.6 a tonne


Latest news


Post market brief

Well, the Resource sector seems to be bouncing as markets juggle a clouded supply outlook against China's ongoing covid concerns.

Still, China's daily covid infections have climbed to 27,307 on Monday, just shy of April record highs of 28,973. More than a week after Beijing announced the easing of several covid-related measures such as quarantine requirements, local governments are now struggling to balance easing restrictions and zero covid. It feels like a rather binary outcome, if more lockdowns come then commodity-related things tank, if we see some restrictions but not full-blown lockdowns, then commodity-related things might move sideways or higher.

Still, the market remains in a cautiously optimistic state. It hasn't had any volatile pullbacks like we've seen in the past few months.

Index

S&P/ASX 200: A push above recent highs. Shorter-term moving averages like the 20-day still playing catch up against current levels.

XJO chart
XJO chart (Source: TradingView)

S&P/ASX 200 Energy: Bounced right on cue off previous highs.

XEJ chart
XEJ chart (Source: TradingView)

Major announcements

Large caps (>$1bn)

  • Technology One (TNE) +5.1% profits after tax rose 22% in FY22 to $88.8m

  • BlueScope Steel (BSL) +4.8% reaffirmed its August guidance that 1H23 underlying earnings will be in the range of $800-900m  

  • Brickworks (BKW) +0.8% AGM noted “once the existing pipeline of work is completed, a period of softer demand is expected, with tightening monetary policy set to act as a handbrake on the housing industry in the medium term.”

  • Polynovo (PNV) Trading halt launched an institutional placement of $30m to accelerate its growth in the US and the rest of the world. New shares are priced at $1.90, a 9.1% discount to the stock’s last close

  • Calix (CXL) Trading halt shares were halted in order to access a press release that refers to Calix and a potential licence agreement 

  • Macquarie Telecom (MAQ) -0.6% AGM notes that earnings will continue to grow in FY23, but only in the second half due to investments in data centres and cloud services in the first  

  • Bapcor (BAP) -0.6% AGM notes that trading and wholesale markets remain robust but retail beginning to see lower market growth due to cost-of-living pressures. Temporary margin compression is expected as price adjustments lag higher input costs 

  • The Star Entertainment Group (SGR) -1.4% AGM notes that between 1 July to 15 November, Gold Coast domestic revenue was up 32% on pre-covid levels, Brisbane up 9% and Sydney down 11%. At the Group level, revenue was up 1%

  • Monadelphous Group (MND) -2.2% AGM anticipates a decrease in FY23 construction revenue before ramping up in FY24. Group revenue is dependent on award and commencement of new construction contracts  

  • 29Metals (29M) -2.8% results of feasibility studies for the Gossan Valley Project confirm the viability of a third mining front. The company has made no material capital commitments before end 2023 and will continue to advance/de-risk the project in the near-term 

  • Life360 (360) -5.4% successfully raised $50m at $6.30 per share, a 3.55% discount to -6.4% to its last close 

Mid-to-small caps

  • Galan Lithium (GLN) +6.2% posted an update on various evaluation workstreams for its Hombre Muerto West Project. Management said the project has the ‘highest grade and lowest impurity lithium brine in Argentina.’

  • Select Harvests (SHV) -4.6% reported $4.8m net profit for FY22 compared to $15.1m a year ago. Management note that almond prices remain at historically low levels. Wet weather and inflation is drove crop product costs up 4.4% YoY

  • Paradigm Biopharmaceuticals (PAR) -8.8% announces that its CEO Marco Polizzi has stepped down 

  • Best & Less (BST) -13.6% Through 20 weeks of trading in FY23, total sales are up 22.8% compared to the prior period but like-for-like sales are down -7.4% 


Broker updates 

Ticker

Company

Broker

Rating

Target price

A2M

A2 Milk

Morgans

Hold

$6.35 from $5.87

PME

Pro Medicus

Morgans

Hold from Add

$58.18

QBE

QBE Insurance

Credit Suisse

Outperform

$16.94 from $17.32

VUK

Virgin Money

Macquarie

Outperform

$4.20 from $3.95


Scans

Top Gainers

Code Company Last % Chg
BEZ Besra Gold Inc $0.059 +47.50%
RC1 Redcastle Resourc... $0.016 +45.46%
CPH Creso Pharma Ltd $0.028 +40.00%
BPH BPH Energy Ltd $0.033 +32.00%
LRS Latin Resources Ltd $0.14 +21.74%
View all top gainers

Top Fallers

Code Company Last % Chg
SDG Sunland Group Ltd $1.76 -28.75%
SW1 Swift Networks Gr... $0.014 -26.32%
LAW Lawfinance Ltd $0.10 -25.93%
AQS AQUIS Entertainme... $0.135 -25.00%
CSE Copper Strike Ltd $0.11 -21.43%
View all top fallers

52 Week Highs

Code Company Last % Chg
NYM Narryer Metals Ltd $0.18 +16.13%
L1M Lightning Mineral... $0.23 +15.00%
GLE GLG Corp Ltd $0.445 +12.66%
IPG Ipd Group Ltd $2.99 +3.10%
MIN Mineral Resources... $85.37 +2.88%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
SDG Sunland Group Ltd $1.76 -28.75%
LAW Lawfinance Ltd $0.10 -25.93%
TGH Terragen Holdings... $0.095 -13.64%
TRT Todd River Resour... $0.017 -10.53%
RRR Revolver Resource... $0.24 -9.43%
View all 52 week lows

Near Highs

Code Company Last % Chg
OZBD Betashares Austra... $44.15 0.00%
OD6 OD6 Metals Ltd $0.575 +5.51%
WVOL Ishares Edge MSCI... $35.72 +0.99%
NUF Nufarm Ltd $5.94 -0.84%
WBCPI Westpac Banking C... $103.59 +0.10%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
MBH Maggie Beer Holdi... $0.22 +4.76%
GNX GENEX Power Ltd $0.17 0.00%
FAR FAR Ltd $0.72 +0.70%
BYE Byron Energy Ltd $0.125 0.00%
LGP Little Green Phar... $0.175 +2.94%
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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