Evening Wrap: ASX 200 reverses a strong open, consumer confidence near record lows

The S&P/ASX 200 closed 23 points lower, down -0.34%.

ASX 200, All Ords and All Tech intraday overview

Markets

The ASX 200 mustered up a 0.67% rally in early trade, only to close at session lows of -0.34%.

• 9 out of 11 sectors declined

• Industrials and Utilities were the only green sectors

• Staples also finished close to breakeven

• Energy led to the downside, -1.59% following a decline in oil prices

• Tech also underperformed, down -0.96%

• 50% of the top 200 fell

Announcements

• Superloop (ASX: SLC) +11.8% signed a mutual, preferred network partnership agreement with Uniti Group

• Dalrymple Bay Infrastructure (ASX: DBI) +6.2% has reached a 10 year pricing and commercial terms agreement with all of its existing customers

• Cettire (ASX: CCT) +1.2% posted 72% sales growth to $66.1m and $5.5m EBITDA for the first quarter of FY23  

• Syrah Resources (ASX: SYR) +1.1% has restarted operations at the Balama Graphite Operation in Mozambique following illegal industrial action by a small contingent of local employees in late September

• Telstra (ASX: TLS) +0.3% CEO Vicki Brady reaffirmed the company’s FY23 guidance of 7-10% earnings growth 

• Mirvac (ASX: MGR) -2.04% announced the retirement of Chair John Mulcahy and CEO Susan Lloyd-Hurwitz. The company has commenced a process for their replacement

• Incannex Healthcare (ASX: IHL) -8.6% completed a ‘constructive’ pre-Investigational New Drug Application with the FDA for its proprietary drug production IHL-216A for the treatment of traumatic brain injury and concussion 

• Baby Bunting (ASX: BBN) -20.5% said first quarter FY23 margins fell 230 bps compared to a year ago due to competitive pricing, freight, foreign exchange and higher-than-expected loyalty redemptions 

Notable broker updates 

• Aurelia (ASX: AMI) Ord Minnett retains a Buy. Target $0.50 (from $0.70)

• Aurizon (ASX: AZJ) Macquarie retains a Neutral rating. Target $3.84 (from $4.05)

• Janus (ASX: JHG) Citi retains a Sell. Target $29.25 (from $31.60)

• Tyro (ASX: TYR) Macquarie retains a Neutral rating. Target $1.50 (from $1.20)

Economy

• Westpac Consumer Confidence Index fell -0.9% to 83.7 in October from 84.4 in September

  • The Index remains in deeply pessimistic levels comparable only to the pandemic and Global Financial Crisis

  • "RBA's smaller-than-expected 25 bp rate rise averted a much bigger fall," the survey report said

  • "Attitudes towards major household purchases, which have shown a sensitivity to rising prices and interest rates, lifted modestly ... up 1.6%. A print of 85.4 is still extremely weak for this sub-index which has a long run average of 126."

  • "What may become clearer is that the tightening cycle still has significantly further to run. That is likely to keep the Consumer Sentiment Index firmly in deeply pessimistic territory in coming months."

• NAB business confidence survey rose 3 points to 25 in September

  • "Business conditions strengthened further in September on the back of very high trading conditions and are now above their pre-COVID peak," said NAB Economics

  • September showed 'further easing in costs' but remain elevated and firms 'have continued to pass these pressures onto their customers'

  • NAB's inflation model suggests core CPI could run over 6.0% year-on-year for the September quarter compared to 6.1% in the June quarter

Commodities 

Nothing too exciting on the commodity front. Most energy and base metal prices were trading around breakeven after posting more sizeable declines overnight.

• Iron ore futures on the Dalian Commodity Exchange fell -2.0%

Latest news

Post market brief

Yikes. The ASX 200 sold into close, down -0.34%. The only good thing was that the reversal wasn't too broad-based, with just under 99 of the top 200 closing lower.

US producer price index on Wednesday, US inflation on Thursday and US retail sales on Friday. Get ready for some fireworks.

Index

S&P/ASX 200: Tried to bounce but met with a discouraging reversal.

XJO chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Materials: Likewise reversal. Pulling into key 20-day and 50-day moving averages. Can we see some support?

XMJ chart (Source: TradingView, Annotations by Market Index)

Scans