Evening Wrap: Banks and defensives lift the ASX 200 higher, Tech stocks lag

 The S&P/ASX 200 closed 59 points higher, up 0.77%. 

The local sharemarket is now up around 1.7% in the last two sessions but Monday's session was led by major banks, real estate and utility stocks. The ASX 200 Financial's Index has staged an impressive reversal from a near one-month low last Friday, Stanmore Resources rallied after an upgrade from Citi, DroneShield shares soar to another fresh all-time high and China flashes some encouraging PMI data.

Let's dive in.

ASX 200 Session Chart

ASX 200 higher and finished near best levels (Source: Market Index)

Markets

Today's Evening Wrap will be another brief one. Carl returns on Tuesday!

The bounce bank continues to a second session, with encouraging APRA lending data lifting bank stocks higher. The gains were led by Westpac (+2.50%), NAB (+1.6%), CBA (+1.4%) and ANZ (+1.1%) – all four major banks are trading around 2-5% from recent highs. The largely in-line US PCE inflation data (the Fed's preferred inflation measure) helped ease bond yields, lifting yield-sensitive sectors like Utilities and Real Estate. Some notable gainers from these sectors include AGL (+2.7%), Goodman Group (+1.8%) and Stockland (+1.7%). Technology stocks struggled, in-line with the Nasdaq's overnight weakness. Large cap names like Wisetech, Xero and NextDC all finished around 1% lower.

Economy

China’s Caixin Manufacturing PMI jumped to 51.7 in May from 51.4 in the previous month.

• Highest since June 2022 and beat analyst forecasts of 51.5

• Production was underpinned by higher new work inflows, strong production and global demand

APRA data shows second consecutive quarter of system credit growth offset by softer deposit growth.

• Westpac led mortgage and deposit growth among major banks

• NAB lagged in business lending while ANZ and CBA had the weakest retail deposits

Latest news

Interesting movers

Trading higher

• +13.5% Navigator Global Investments (NGI) – Guidance

• +10.4% APM Human Services (APM) – To be acquired by Madison Dearborn at $1.45

• +10.2% DroneShield (DRO) – Initiated Buy at Shaw and Partners

• +9.8% Percheron Therapeutics (PER) – Appoints CMA

• +7.1% Vulcan Energy (VUL) – Raises 40m Euros from CIMIC, Hancock Prospecting

• +5.0% Strike Energy (STX) – Walyering-7 well update

• +2.4% Ingenia Communities (INA) – JPMorgan upgrade

Trading lower

• -14.2% WA1 Resources (WA1) – Assay results

• -10.3% Lovisa (LOV) – CEO succession update

• -4.8% The Reject Shop (TRS) – Jarden downgrade

• -4.7% Betmakers Technology (BET) – Agreements with Bet365

Broker notes

Morgan Stanley’s take on ASX (ASX):

• Underweight with $53.50 target price

• “The ASX will provide first-time FY25E cost guidance at its Investor Forum. We think guidance will be higher than what consensus expects, as ASX is simultaneously modernising critical tech (inc. CHESS), satisfying regulatory obligations, while attempting to develop new revenue opportunities.”

• The analysts expect the ASX to guide to FY25 costs of around $490 million, which will drive a 3-8% selloff for the stock

Citi’s take on Champion Iron (CIA):

• Buy with $8.60 target price

• FY24 EBITDA was a 6% beat against Citi’s expectations from lower sea freight and positive provisional pricing adjustments in 4Q24

• “CIA continues to solidify operations following a strategy to identify bottlenecks at Bloom Lake by pushing beyond the 15mtpa nameplate capacity.”

Scans