Evening Wrap: ASX extends gains, Woodside briefly hits a 2-year high, uranium stocks rise

The S&P/ASX 200 closed 50 points higher, up 0.71%.

 Woodside closes at levels not seen since January 2020, Qantas posts a -$1.2bn loss but issues a $400m share buyback, China announces another stimmy and Goldman Sachs breaks down the Fed’s annual Jackson Hole Economic Policy Symposium.

Let's dive in.

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ASX 200, All Ords and All Tech intraday overview

Markets

• 9 out of 11 sectors higher

• Real Estate led thanks to a 4.1% gain from Goodman Group

• Energy extends gains thanks to higher oil prices

• Staples tanked after Woolworths fell -3.2% post earnings

• Growth-heavy sectors including Tech and Discretionary underperformed benchmarks

• 66% of the top 200 companies advanced

Stocks

• Nine Entertainment (ASX: NEC) +9% reported FY22 net profit growth of 71% to $315m, below Bloomberg estimates of $342.8m. Nine plans to conduct an on-market share-buyback of up to 10% of its issued shares (up to 170.5m ordinary shares)

  •  Nine Chairman: “This initiative reflects the Company's strong performance and balance sheet, and leaves Nine with capacity to maintain a dividend payout ratio of 60-80% through the cycle, as well as further invest in strategic growth opportunities.”

• IDP Education (ASX: IEL) +7.5% posted 120% net profit growth to $106.6 in FY22. The stock trades at a price-to-earnings of around 81. Approximately 7.3% of the stock is shorted, according to Shortman

• Qantas (ASX: QAN) +7.05% posted a statutory loss of -$1.2bn in FY22, well-above Bloomberg estimates of -$855.8m. Total domestic flying averaged 63% of pre-covid levels and reached 103% by 30 June. Board approved a $400m share buyback 

  • Qantas CEO: ““This result takes the Statutory Loss Before Tax impact of COVID on the Qantas Group to nearly $7 billion and our total revenue losses to $25 billion. These figures are staggering and getting through to the other side has obviously been tough.”

• Judo (ASX: JDO) +6.6% FY22 results exceeded its IPO prospectus forecasts. Lending portfolio jumped 73% to $6.1bn ahead of $6.0bn forecasts. Net loss of -$7.7bn was better than -$10.2m expected 

• Zip (ASX: ZIP) -2.1% reported FY22 revenue growth of 57% to a record $620m. Net losses ballooned to -$1.1bn from a -$743m loss a year ago

  • Zip CEO: “I want to share that we have already delivered on a number of initiatives to reduce cash burn, manage credit losses and improve unit economics.”

• Woolworths (ASX: WOW) -3.2% posted FY22 net profit growth of 0.7% to $1.5bn, in-line with Bloomberg estimates of $1.5bn. Final dividend fell -3.6% to 53 cents per share

  • Woolworths CEO: “While still very difficult to separate from the COVID-related impacts of the last two and a half years, we are seeing some customers trade down from beef into more affordable sources of protein and trade across from fresh vegetables into more affordable frozen and canned offerings.”

• Flight Centre (ASX: FLT) -4.6% posted a 154% jump in FY22 revenue to $1bn. Underlying EBITDA loss of $183.1m was in-line with recent $180-190m guidance

  • Earnings presentation: “Full market recovery not expected in FY23, but FLT likely to be tracking close to monthly PC TTV levels by year-end if current trends continue.”

• City Chic (ASX: CCX) -19.3% posted FY22 revenue growth of 39% to $369.2m, in-line with Bloomberg estimates of $358.2m. EBITDA was a sharp miss, growing 11.3% to $47.1m versus $51.8m estimates

Economy

• South Korea raised interest rates by 25 bps to 2.5%

  • "Currently available information suggests that global economic downside risks have increased, affected by the prolonged Ukraine crisis and significant policy rate hikes in major advanced countries, while inflation has remained high," the bank said in a statement 

  • The central bank warned that downside risks to the country’s economy are beginning to build, notably a slowdown in exports due to weakening economic growth in major countries

Commodities 

• Iron ore futures on China’s Dalian Commodity Exchange inched 0.35% higher

  • “The State Council is stepping up efforts to stabilise the economy with new measures designed to improve market liquidity and encourage spending,” Bloomberg reported

  • 19 policy measures were issued including US$43.7bn of quotas for development and pledges for more infrastructure spending

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Scans

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Latest news

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Post market charts

Hey, I feel compelled to say ‘it’s Kerry here’ even though it's me the whole way through. Just some quick housekeeping:

• A few readers reached out about a mailing list for the Evening Wrap. We’re still working on a few things for this piece. When we get to creating an email list - you'll be the first to know

• The biggest tweak we’re looking to make is for the image right after ‘Let’s dive in.” I want something with a bit more ‘oomph’

Indices and sectors

S&P/ASX 200: Nothing much to see here. The ASX 200 has recouped roughly half the losses it suffered on Monday and Tuesday. It bounced where it needed to. Most headlines and commentary about markets right now go something along the lines of “markets not doing much and waiting for Powell Jackson Hole speech.” 

Source: TradingView, Annotations by Market Index

S&P/ASX 200 Energy: Energy has made quite a few appearances in our Wraps. It seems like a ‘buy the dip’ strategy would’ve worked wonders. Energy heavyweight Woodside (ASX: WDS) rallied to levels not seen since January 2020 but closed 2% higher, down from session highs of 4%. The stock is rather extended, trading almost 8% above its 20-day moving average. 

XEJ weekly chart (Source: TradingView, Annotations by Market Index)

S&P/ASX 200 Materials: Starting to push above the 200-day moving average. Iron ore heavyweights BHP (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue (ASX: FMG) slowly chugging along as China pushes out another stimmy headline.

Source: TradingView, Annotations by Market Index

Uranium to the moon: Just kidding. Firstly, most uranium stocks have gone nowhere for almost 12 months. If the sector was truly that bullish, it wouldn’t be ping ponging like this. Now, onto the bullish stuff. It’s interesting to see Japan's PM Fumio Kishida not just want to revive idled nuclear reactors but build next-generation ones. India has also stepped up nuclear efforts.

The rather left-field news has seen horizontal moves for uranium stocks, but performance has been varied. You have names like Boss Energy (ASX: BOE) and 92 Energy (ASX: 92E) gap up on Thursday and fade. Then you have names like Paladin Energy (ASX: PDN) and Deep Yellow (ASX: DYL) gap up and drive higher. The good thing about such a big move is that it helps these trendless long-term moving averages like the 200-day start to slope upwards. The bad thing is that they're rather extended from the 20-day.

Paladin Energy price chart (Source: TradingView, Annotations by Market Index)

Stocks

Macquarie Telecom (ASX: MAQ): Poking its head above an 8-month long trendline

Source: TradingView, Annotations by Market Index

Allkem (ASX: AKE): Third time lucky or resistance?

Source: TradingView, Annotations by Market Index

Arafura Resources (ASX: ARU): Working through a cap raise (gap down a few weeks ago). Starting to close the gap.

Source: TradingView, Annotations by Market Index

Food for thought

Goldman Sachs on Jackson Hole: “The Fed’s annual Jackson Hole Economic Policy Symposium takes place on Friday and will open with a speech by Chair Powell at 10 am EST. We expect Powell to reiterate the case for slowing the pace of tightening laid out in his July press conference and the July minutes released last week. He is likely to balance that message by stressing that the FOMC remains committed to bringing inflation down and that upcoming policy decisions will depend on incoming data … We expect the FOMC to slow the pace of rate hikes to 50 bp in September and 25 bp in November and December, though we see the risks to both the near-term pace and our terminal rate forecast of 3.25% to 3.5% as tilted to the upside.” 

Note: 10 am EST on Friday is 3 am AEST on Sunday