Market Wraps

Evening Wrap: Big Four Banks and Woodside rally + A new ASX 200 inclusion

Wed 19 Jul 23, 4:50pm (AEST)

The S&P/ASX 200 closed 40 points higher, up 0.55%. 

The Index kicks on after a short two-day pullback, bank stocks rally thanks to better-than-expected results from their US counterparts, UK inflation cools to a 15-month low but remains painstakingly high, the ASX 200 has a new inclusion next week, Microsoft's new product sends a small cap rival spiraling lower and why the market might have a good day tomorrow.

Let's dive in.


Today in Review

Wed 19 Jul 23, 4:29pm (AEST)

Name Value % Chg
Major Indices
ASX 200 7,323.7 +0.55%
All Ords 7,538.2 +0.55%
Small Ords 2,899.2 +0.85%
All Tech 2,535.0 +0.64%
Emerging Companies 2,169.5 +0.90%
Currency
AUD/USD 0.6793 -0.27%
US Futures
S&P 500 4,589.0 +0.03%
Dow Jones 35,174.0 +0.09%
Nasdaq 15,979.5 +0.03%
Name Value % Chg
Sector
Energy 11,267.7 +1.70%
Financials 6,468.2 +1.49%
Real Estate 3,130.4 +0.90%
Information Technology 1,907.5 +0.79%
Consumer Discretionary 2,990.9 +0.63%
Utilities 9,048.6 +0.42%
Industrials 6,812.5 +0.39%
Health Care 40,151.5 +0.32%
Consumer Staples 13,046.5 +0.24%
Communication Services 1,545.7 -0.34%
Materials 18,200.9 -0.56%

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ASX 200 Session Chart

S&P ASX 200 (LIVE DATA) Share Prices & Charts - Market Index
ASX 200 higher and finished a little off session highs (Source: Market Index)

Markets

The Index is pushing out after a shallow two-day pullback, rallying into a key trendline (below). Let's see how it behaves around this key 7,300 area. The Big Four Banks all rose at least 1.0% after US peers like Charles Schwab, Morgan Stanley and Bank of America all posted better-than-expected earnings overnight. Woodside (+1.4%) led the energy sector higher despite revenues falling 29% in the second quarter but largely in-line with consensus expectations.

XJO daily chart
ASX 200 daily chart (Source: TradingView)

Economy

UK inflation rose 7.9% year-on-year in June from 8.7% in May.

  • Below analyst expectations of 8.2%

  • Marks a 15-month low for headline inflation

  • Core inflation eased to 6.9% in June from 7.1%

  • This also beat analyst expectations of no change


Latest news


Market Insights

A few more stock specific tidbits today.

A late notice ASX 200 inclusion: Blackmores (ASX: BKL) is set to be removed from the ASX 200 (subject to final court approval of the scheme of arrangement). This announcement was made on Tuesday, 18 July at 5:50 pm.

Infrastructure services provider Ventia (ASX: VNT) will replace Blackmores, effective prior to the open of trading on Monday, July 24.

This isn't exactly a rebalance where funds have weeks to rebalance. Funds or index trackers have essentially two more days to accumulate. Could we see some buying follow through by week end? Or is Ventia just sliding in as #200 with insignificant weighting?

Dropsuite (ASX: DSE) provides cloud backup servers for emails, Office 365 and other important business information. The stock traded sideways for almost two years and finally broke out in April, up as much as 85% by mid July.

Last night, Microsoft introduced Microsoft 365 Backup and Microsoft 365 Archive, which provides recovery of things like OneDrive, SharePoint and Exchange data.

Dropsuite finished the Wednesday session down 21.6% (from session lows of -33.8%).

Finishing with a random and likely useless fact: There are only four days of the year where the ASX 200 has historically risen more than 0.60% (based on daily average performance between June 1992 to March 2023). Those days are:

  • March 26: +0.63%

  • July 20: +0.60%

  • November 4: +0.74%

  • November 6: +0.66%


Interesting news and movers

Trading higher

  • +24.3% ImpediMed (IPD) – First top 5 national payor covering testing 

  • +16.3% Theta Gold Mines (TGM) – Commences drilling

  • +12.9% Imugene (IMU) – NOA for patent application

  • +11.2% Recce Pharma (RCE) – Phase 1 study results

  • +9.0% Mount Gibson Iron (MGX) – Q4 production and sales update

  • +6.7% Brainchip (BRN) – Granted US patent

  • +4.4% Ampol (ALD) – Reports first half EBIT

  • +3.5% Endeavour Group (EDV) – Upgraded by Jarden

  • +2.8% Whitehaven Coal (WHC) – BHP may offer coal assets separately

  • +2.7% Catalyst Metals (CYL) – Completes scoping study

  • +0.8% Regal Partners (RPL) – FUM update (Tue)

  • Banking sector move: CBA (+2.0%), ANZ (+2.0%), Westpac (+1.9%), NAB (+1.1%)

Trading lower

  • -27.8% Peninsula Energy (PEN) - Delays production

  • -6.6% Cobalt Blue (COB)

  • -5.8% Northern Star (NST) – Fourth quarter production update

  • -2.5% Annsell (ANN) – Downgrade by JPMorgan

  • -2.4% Aurizon (AZJ) – Guidance (Tue) 


Broker notes

A few standalone Macquarie notes:

Allkem (AKE)

  • Rating and target price: Outperform with $19.10 ($16.44 at 18 July)

  • “AKE has announced first production from Olaroz stage 2, with timing largely in line with our expectations.”

  • “The merger transaction is expected to close by the end of CY23. We have upgraded AKE's EV/EBITDA multiples from 4.0x to 5.0x to reflect the extension of the company's lithium value chain given the proposed merger.”

Hub24 (HUB)

  • Rating and target price: Outperform with $31.40 ($25.67 at 18 July)

  • “Net flows of ~$2.1bn in the quarter were impacted by elevated gross outflows.”

  • “Adviser numbers of 4,011, +7.0% QoQ were a highlight of the update and should continue to support flows over the medium-term.”

  • “The structural growth story remains intact and believe the near-term risks on expenses and reduced net flow expectations are largely reflected at the current valuation.”

Syrah Resources (SYR)

  • Rating and target price: Outperform and $1.30 ($0.74 at 18 July)

  • “Operations at Balama were on pause from May, with production and sales down 63% and 43% QoQ respectively.”

  • “The funding gap is now US$100m, which we assume is funded via an equity raising in 1QCY24 at A$0.70/sh (10% discount to current price).”

  • “The earnings downgrade and changing our equity raising assumptions have driven a 35% decrease to our price target to A$1.30.”

Morgan Stanley has another high conviction play heading into August reporting season:

  • Key Idea #2: Audinate

  • Audinate has noted “that audio penetration (<10% today) can sustain 26-31% growth alone vs. the market’s base case of c.26% growth with accelerating video contribution.”

  • "Networked AV shift seems inevitable – and Covid-19 has accentuated its superiority.”

  • “Our base case is that AD8 becomes self-funding from FY24e with a more obvious earnings profile from FY25e.”


Scans 

Top Gainers

Code Company Last % Chg
PEC Perpetual Resourc... $0.015 +36.36%
CVR Cavalier Resource... $0.15 +25.00%
DRO Droneshield Ltd $0.375 +22.95%
IPD Impedimed Ltd $0.225 +21.62%
YAR Yari Minerals Ltd $0.017 +21.43%
View all top gainers

Top Fallers

Code Company Last % Chg
PEN Peninsula Energy Ltd $0.133 -26.39%
DSE Dropsuite Ltd $0.28 -24.32%
WSR Westar Resources Ltd $0.029 -21.62%
FGL Frugl Group Ltd $0.011 -21.43%
ZEU ZEUS Resources Ltd $0.017 -19.05%
View all top fallers

52 Week Highs

Code Company Last % Chg
IPD Impedimed Ltd $0.225 +21.62%
IPT Impact Minerals Ltd $0.018 +16.67%
TGM Theta Gold Mines Ltd $0.10 +16.28%
MM1 Midas Minerals Ltd $0.385 +10.00%
MGU Magnum Mining and... $0.047 +9.30%
View all 52 week highs

52 Week Lows

Code Company Last % Chg
LML Lincoln Minerals Ltd $0.011 -15.39%
SVG Savannah Goldfiel... $0.091 -13.33%
OLI Oliver's Real Foo... $0.015 -11.77%
CST Castile Resources... $0.07 -10.26%
AUQ Alara Resources Ltd $0.023 -8.00%
View all 52 week lows

Near Highs

Code Company Last % Chg
IRE Iress Ltd $10.73 -0.28%
BILL Ishares Core Cash... $100.58 +0.02%
AVH Avita Medical Inc $5.94 +0.17%
CWP Cedar Woods Prope... $5.04 -0.59%
ASIA Betashares Asia T... $7.45 -1.06%
View all near highs

Relative Strength Index (RSI) Oversold

Code Company Last % Chg
LNK Link Administrati... $1.58 -0.94%
BCB Bowen Coking Coal... $0.148 +5.36%
A11 Atlantic Lithium Ltd $0.475 +5.56%
LKE Lake Resources N.L. $0.278 -0.89%
SNAS Global X Ultra Sh... $2.27 -2.99%
View all RSI oversold

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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