News | Market Wraps
Evening Wrap: ASX 200 tumbles again, China stimulus buoys iron ore, lithium miners rally
The S&P/ASX 200 closed 85 points, down -1.2%.
Mentioned
The S&P/ASX 200 closed 85 points, down -1.2%.
We're on a two day losing streak where the ASX 200 opened flat, progressively sold off and closed at session lows. Altium jumps on better-than-expected earnings, Pilbara Minerals posts a thirty-fold jump in profits and China's US$29bn stimmy buoys local mining stocks.
Let's dive in.
ASX 200, All Ords and All Tech intraday overview
Markets
2 out of 11 sectors higher
Energy and Utilities were the only green sectors
Staples underperformed after Endeavour shares tumbled -12.3% post earnings
Financials also lagged, with the Big 4 Banks all down around -2%
78% of the top 200 companies declined
Stocks
Altium (ASX: ALU) +19.8% posted 57% net profit growth to US$56m ahead of Bloomberg estimates of $48m
Altium CEO: “Altium delivered a strong financial performance for fiscal 2022 supported by a record performance from our Octopart business and solid growth from our Electronic Design Software business,”
Ansell (ASX: ANN) +8.6% reported a -27.9% decline in FY22 EPS to 138.6 cents but in-line with previous guidance of 125-145 cents
Ansell CEO: “Surgical and Life Sciences grew above market rates showing the benefit of some important new business wins. Mechanical achieved respectable growth in a mixed industrial demand environment, delivering very strong results in emerging markets and success with new products.”
Monadelphous Group (ASX: MND) +5.9% posted 11% profit growth to $52m ahead of Bloomberg estimates of $48m
Monadelphous: “The result reflects strong demand for maintenance services across the resources and energy sectors as customers maintained high levels of production, capitalising on favourable commodity prices.”
Pilbara Minerals (ASX: PLS) +3.15% posted a 993% jump in statutory profit to $561.8m. Still, the profit figure missed Bloomberg estimates of $829.9m
Breville Group (ASX: BRG) -0.1% FY22 profits rose 16.2% to $105.7m, slightly below Bloomberg estimates of $108m
Breville: “Gross margins were well managed, with demonstrated pricing power in the global segment, offsetting an inflationary backdrop of increased freight and product costs and a strong USD”
Credit Corp (ASX: CCP) -6.1% says an internal QA review found it has been overcharging interest rates to a number of customers. Plans to remediate up to $4m to customers but does not expect this to have a material impact on FY23 earnings
Kogan (ASX: KGN) -6.6% posted an FY22 net loss of -$35.5m compared to $3.5m profit a year ago. The business was impacted by excess inventory, covid interruptions and increased logistics costs
Endeavour Group (ASX: EDV) -12.3% shares tumbled even after FY22 profits of $495m beat Bloomberg estimates of $489.5m. Expects ‘retail drinks and hospitality market’ to continue the run towards normal in FY23
Management warned of a “variety of factors which may impact performance in the year ahead including inflation, limited team availability and the potential for supply chain disruption."
Service Stream (ASX: SSM) -17.2% posted FY22 revenue growth of 94.5% but adjusted net profits fell -19% due to impairments and onerous contracts. The network services provider faced several challenges associated with covid, project resourcing and extreme weather events
Economy
S&P Global Australia PMI:
Manufacturing: 54.5 in August from 55.7 in July
Services: 49.6 in August from 49.8 in July
Readings below 50 signal a contraction in activity
Commodities
Iron ore futures on China's Dalian Commodity Exchange rallied 2.6%
Most commodities futures opened higher in China after policymakers announced plans to offer 200bn yuan (US$29bn) in special loans to ensure stalled housing projects are delivered to buyers, Bloomberg reported
Scans
Top Gainers
Code | Company | Last | % Chg |
|---|---|---|---|
| BPH | BPH Energy Ltd | $0.042 | +200.00% |
| MAG | Magmatic Resources Ltd | $0.185 | +107.87% |
| BUY | Bounty Oil & Gas NL | $0.011 | +57.14% |
| AQC | Australian Pacific Coal Ltd | $0.40 | +56.86% |
| GMLDA | Gateway Mining Ltd | $0.085 | +28.79% |
Top Fallers
Code | Company | Last | % Chg |
|---|---|---|---|
| DMG | Dragon Mountain Gold Ltd | $0.015 | -25.00% |
| DOC | Doctor Care Anywhere Group Plc | $0.17 | -22.73% |
| PRL | Province Resources Ltd | $0.11 | -18.52% |
| PGM | Platina Resources Ltd | $0.028 | -17.65% |
| DEX | Duke Exploration Ltd | $0.061 | -17.57% |
52 Week Highs
Code | Company | Last | % Chg |
|---|---|---|---|
| MAG | Magmatic Resources Ltd | $0.19 | +113.48% |
| AQC | Australian Pacific Coal Ltd | $0.40 | +56.86% |
| GMLDA | Gateway Mining Ltd | $0.085 | +28.79% |
| ANG | Austin Engineering Ltd | $0.31 | +12.73% |
| PFG | Prime Financial Group Ltd | $0.215 | +7.50% |
52 Week Lows
Code | Company | Last | % Chg |
|---|---|---|---|
| OMX | Orange Minerals NL | $0.08 | -14.89% |
| SIX | Sprintex Ltd | $0.039 | -13.33% |
| KLL | Kalium Lakes Ltd | $0.043 | -12.25% |
| REM | Remsense Technologies Ltd | $0.14 | -9.68% |
| BGD | Barton Gold Holdings Ltd | $0.145 | -9.38% |
Near Highs
Code | Company | Last | % Chg |
|---|---|---|---|
| WVOL | Ishares Edge MSCI World Minimum Volatility ETF | $34.93 | -0.71% |
| WBCPI | Westpac Banking Corporation | $103.50 | -0.19% |
| GCI | Gryphon Capital Income Trust | $1.995 | -0.25% |
| VVLU | Vanguard Global Value Equity Active ETF (Managed Fund) | $58.22 | -1.37% |
| NEA | Nearmap Ltd | $2.09 | +0.97% |
Relative Strength Index (RSI) Oversold
Code | Company | Last | % Chg |
|---|---|---|---|
| MLX | Metals X Ltd | $0.273 | +2.83% |
| AHQ | Allegiance Coal Ltd | $0.108 | +2.38% |
| AOF | Australian Unity Office Fund | $1.675 | -0.30% |
| AGL | AGL Energy Ltd | $7.965 | +2.38% |
| ABC | Adbri Ltd | $2.30 | +4.07% |
Latest news
Post market charts
S&P/ASX 200: The pullback so far has been rather heavy, with two back-to-back declines of around -1%. Both days, the ASX 200 opened flat, sold off intraday and closed at session lows. Plus we sliced through the 20 and 200 day moving averages without a bounce. It’s not a good look.
Source: TradingView, Annotations by Market Index
S&P/ASX 200 Financials: On a four-day losing streak, sliding -4% into no man's land. Westpac economists forecast that Sydney property values will fall -10% this year and another -8% in 2023. Likewise, Melbourne prices were projected to fall -8% this year and -10% next year. Senior economist Matthew Hassan said “the housing downturn that began at the start of the year has accelerated and broadened over the last three months.”
S&P/ASX 200 Staples: Damn. I guess that’s why they call it a bear market rally. The Staples Index sets up for a break out, starts to move out, sucks you in and then bam.
Source: TradingView, Annotations by Market Index
Stocks
Iron ore names: A few charts like Grange Resources (ASX: GRR) and Champion Iron (ASX: CIA) are holding up pretty well. Thanks China.
Source: TradingView, Annotations by Market Index
Biotech starting to weaken: CSL (ASX: CSL) ekes a bit lower. Telix Pharma (ASX: TLX) and Clinuvel Pharma (ASX: CUV) sell off. Polynovo (ASX: PNV) pulling into the 20-day. Biotech names all started to move around the same time, breaking out of 3-5 month bases. So what happens if CSL starts to test $286 or worse, breaks lower?
Source: TradingView, Annotations by Market Index
Big lithium, little lithium: Macquarie released a note on Monday afternoon, upgrading its short and medium-term outlook for lithium prices and share price targets for five large cap producers. We saw names like Pilbara Minerals (ASX: PLS), Allkem (ASX: AKE) and Mineral Resources (ASX:MIN) hold up well in a weak market. Whereas most other lithium names finished lower. Perhaps inflows are going into large cap names that are already producing instead of specs?
Source: TradingView, Annotations by Market Index
Random spec chart: Norwest Energy (ASX: NWE) chart starting to tighten around 0.45 cents.
Source: TradingView, Annotations by Market Index
What to look out for on Wednesday
Pullback needs to be orderly: So far, the pullback has been pretty ugly. Buyers aren't stepping up and sellers are in control. Imagine if we didn't get that US$29bn stimulus headline from China to buoy resources. Things would've probably been a little uglier. The VIX is starting to spike from lows of 12, now at 14.3. We want less volatility, not more.
