Market Wraps

Evening Wrap: ASX 200 higher + Macquarie's take on the minimum wage increase

Mon 05 Jun 23, 4:44pm (AEST)

 The S&P/ASX 200 closed 71 points higher, up 1.0%.

The market continued to bounce thanks to strength across retailers, miners and healthcare stocks, Australian mineral exploration expenditure begins to ease, Macquarie's take on the Fair Work Commission minimum wage decision, Citi believes Appen shares are far too expensive and how does the ASX 200 perform on RBA decision days?

Let's dive in.


Today in Review

Mon 05 Jun 23, 4:24pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,216.3 +1.00%
All Ords 7,401.2 +0.96%
Small Ords 2,846.8 +0.54%
All Tech 2,397.1 -0.33%
Emerging Companies 2,045.1 -0.62%
Currency
AUD/USD 0.6604 -0.04%
US Futures
S&P 500 4,286.5 -0.03%
Dow Jones 33,854.0 +0.11%
Nasdaq 14,533.75 -0.28%
Name Value % Chg
Sector
Consumer Discretionary 2,952.6 +1.75%
Materials 17,906.1 +1.49%
Health Care 44,953.2 +1.02%
Financials 6,077.9 +0.98%
Real Estate 3,144.1 +0.80%
Consumer Staples 12,971.7 +0.73%
Energy 10,882.4 +0.71%
Industrials 6,821.7 +0.53%
Communication Services 1,561.7 +0.46%
Utilities 8,598.2 -0.29%
Information Technology 1,778.5 -1.09%

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ASX 200 Session Chart

S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
ASX 200 higher but closed off session highs (Source: Market Index)

Markets

The ASX 200 rallied thanks to a strong lead from Wall Street and strength across the resource sector. The worry here is if this is the kind of strength that'll fade. And we've seen plenty of that take place in the past few weeks. The RBA's interest rate decision takes place on Tuesday 2:30 pm AEST and consensus expects a pause. But after the hotter-than-expected inflation print last week, will the RBA be forced to hike? Regardless, this is the next major catalyst or focus point for markets. So let's see where we end up tomorrow.

Economy

Australian mineral exploration expenditure rose 0.7% QoQ and 4.0% YoY to $1.03bn in the March quarter.

  • Gold exploration recorded the largest fall, down 20.5% QoQ to $285.7 million

  • Exploration for new deposits fell 22.2% QoQ to $274.6 million

  • Exploration for existing deposits fell 11.2% QoQ to $617.2m


Latest news


Market Insights

ASX 200 on Rate Decision Days

The RBA started its hiking cycle last May, so let's take a look at how the market tends to perform on rate hike days.

2022:

  • 3 May -0.42% (larger-than-expected)

  • 7 Jun -1.53% (larger-than-expected)

  • 5 Jul +0.25% (in-line)

  • 2 Aug +0.07% (in-line)

  • 6 Sep -0.38% (in-line)

  • 4 Oct +3.48% (smaller-than-expected)

  • 1 Nov +1.65% (in-line)

  • 6 Dec -0.78% (in-line)

2023:

  • 7 Feb -0.46% (in-line)

  • 7 March: +0.49% (in-line)

  • 8 April: +0.18% (in-line)

  • 2 May: -0.91% (larger-than-expected)

Averages:

  • Larger-than-expected: -0.95%

  • In-line: +0.13%

  • Smaller-than-expected: +3.48%


Interesting news and movers

Trading higher

  • +17.3% Immutep (IMM) – Part C TACTI-002 Phase II Trial data

  • +5.0% NRW Holdings (NWH) – Upgraded by Citi

  • +2.7% Elders (ELD) – CEO Mark Allison to continue role 

  • Iron ore sector move: Fortescue (+3.6%), BHP (+1.7%), Rio (+1.3%)

  • Lithium sector move: Global Lithium (+4.4%), Patriot Battery Metals (+4.2%), Core Lithium (+2.3%), Allkem (+2.2%), Pilbara Minerals (+2.0%)

Trading lower

  • Gold sector move: Perseus (-2.9%), Bellevue Gold (-1.5%), Newcrest (-1.4%)

  • Tech sector move: Xero (-1.8%), Altium (-1.2%), Wisetech (-0.7%)


Broker notes

Macquarie’s take on the Fair Work Commission minimum wage decision:

  • “The Fair Work Commission (FWC) has decided to increase award wages by 5.75% and the national minimum wage by 8.65%, effective 1 July.”

  • “Staples are better placed to pass through costs, with QSR operators likely to face the most significant margin pressure in our coverage.”

  • “We flag that despite these increases, COL, WOW, and EDV are likely best placed to pass on these costs through to the consumer given the staples nature of its products.”

  • “QSR operators CKF and DMP, on the other hand, are likely most at risk from these rising costs, as consumers become more price sensitive.”

Citi’s take on Appen:

  • Sell with $2.40 target price

  • “Gen AI is a tailwind, but at 58x EBITDA upside is more than priced in.”

  • “We forecast revenue growth to pick up in FY24e/FY25e (11%/13%) which primarily reflects increased work from large language models (LLMs)/GenerativeAI.”

  • “However, Appen’s current crowd advantage could be limited given the fine-tuning and assurance work requires ‘segmented’ or specialized crowd workers (e.g. OpenAI used 40 skilled contractors to fine-tune GPT-3).”


Scans

Top Gainers

Code Company Last % Chg
REZ Resources & Energ... $0.033 +175.00%
SLM Solis Minerals Ltd $0.59 +38.82%
RR1 Reach Resources Ltd $0.011 +37.50%
SIX Sprintex Ltd $0.038 +35.71%
FTL Firetail Resource... $0.115 +27.78%
View all top gainers

Top Fallers

Code Company Last % Chg
IDT IDT Australia Ltd $0.068 -29.17%
WWG Wiseway Group Ltd $0.052 -27.78%
NHE Noble Helium Ltd $0.20 -16.67%
LCT Living Cell Techn... $0.011 -15.39%
SKS SKS Technologies ... $0.15 -14.29%
View all top fallers

52 Week Highs

Code Company Last % Chg
REZ Resources & Energ... $0.033 +175.00%
SLM Solis Minerals Ltd $0.59 +38.82%
WA1 WA1 Resources Ltd $5.97 +27.29%
DYM Dynamic Metals Ltd $0.315 +16.67%
WSR Westar Resources Ltd $0.093 +12.05%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
VBS Vectus Biosystems... $0.43 -14.00%
LYK Lykos Metals Ltd $0.048 -12.73%
KAL Kalgoorlie Gold M... $0.031 -11.43%
HTA Hutchison Telecom... $0.04 -11.11%
JGH Jade Gas Holdings... $0.04 -11.11%
View all 52 week lows

Near Highs

Code Company Last % Chg
USD Betashares U.S. D... $14.92 +0.07%
CSL CSL Ltd $310.73 +0.89%
IKO Ishares MSCI Sout... $100.17 +0.30%
WVOL Ishares Edge MSCI... $36.27 +0.97%
STX Strike Energy Ltd $0.49 0.00%
View all near highs

Near Highs

Code Company Last % Chg
USD Betashares U.S. D... $14.92 +0.07%
CSL CSL Ltd $310.73 +0.89%
IKO Ishares MSCI Sout... $100.17 +0.30%
WVOL Ishares Edge MSCI... $36.27 +0.97%
STX Strike Energy Ltd $0.49 0.00%
View all near highs

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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