Evening Wrap: Risk-off ahead of Powell's speech, ASX 200 at 1-month low, Wesfarmers tops estimates

The Index finishes the week down 0.46%, Wesfarmers shares soar on FY23 earnings and dividend beat, iron ore prices hit a near 1-month high, Macquarie's take on recent results and why you should follow the Nvidia story.

Let's dive in.

ASX 200 Session Chart

ASX 200 falls intraday and finished near session lows (Source: Market Index)

Markets

The ASX 200 gave back all Tue-Thu gains and back to a 1-month low ahead of Powell's Jackson Hole speech at 10:00 pm AEST tonight. Tech and Resources led to the downside, which flags a combination of risk-off and concerns about economic growth. What's a little odd is that Singapore iron ore future actually finished near a 1-month high on Friday, up 1.65% to US$114 a tonne.

Wesfarmers (+3.2%) was a major bright spot after its earnings and dividend beat consensus expectations, led by a solid performance from Bunnings, Kmart and Officeworks. This helped prop up Staples and Discretionary sectors.

All-in-all, let's see what J-Pow says at J-Hole.

Economy

No major economic announcements.

Latest news

Market Insights: Thinking about Nvidia

I haven't been watching markets too much today. So just a little Friday food for thought about Nvidia and why it's such an interesting story to follow (even if its US-listed).

• We get to see how superinvestors manage their trade

  • E.g. Druckenmiller acquire approximately 950,000 Nvidia shares between late 2022 to July 2023 to make up approximately 14% of his portfolio. At current prices, he's up almost US$300 million

• We get to see a bubble form, how long valuations can stay inflated and whether or not things will pop

• We get to see how the market reacts to blowout earnings, to which Nvidia shares closed around breakeven on Thursday from a session high of 6.6%

  • Goldman Sachs notes how "something that stood out to us was the lack of institutional demand on our desk in Nvidia post earnings ... in stark contrast to last quarter, where we had 10+ buyers on our desk after hours ... a reflection of much fuller institutional positioning this time around."

• We get to see a new technology emerge, what will its adoption be like and whether or not its a fad

• We get to see companies begin to crowd the AI and chip market

Interesting news and movers

Trading higher

• +44.0% Bravura Solutions (BVS) – Earnings

• +17.1% Accent Group (AX1) – Earnings

• +12.4% Thorn Group (TGA) – Takeover offer at $1.62 per share

• +10.9% Aussie Broadband (ABB) – Earnings

• +7.1% Regis Healthcare (REG) – Earnings

• +6.6% Ardent Leisure (ALG) – Earnings

• +6.3% Lovisa (LOV) – Upgraded by multiple brokers

• +3.8% Jumbo Interactive (JIN) – Earnings

• +3.2% Wesfarmers (WES) – Earnings

• +3.1% Duratec (DUR) – Earnings

• +1.1% Probiotec (PBP) – Earnings

Trading lower

• -19.8% Integrated Research (IRI) – Earnings

• -10.3% Cettire (CTT)

• -8.9% Judo Capital (JDO) – Downgrade by multiple brokers

• -8.0% Pilbara Minerals (PLS) – Earnings

• -7.7% IPD Group (IPD) – Earnings

• -6.3% Weebit Nano (WBT) – Earnings

• -6.0% PEXA (PXA) – Earnings

• -5.5% Perpetual (PPT) – Downgraded by Citi

• -4.9% South32 (S32) – Downgraded by Macquarie

• -3.3% Australian Ethical (AEF) – Earnings 

Broker notes

Macquarie’s take on recent results:

Auckland Airport (AIA) – Outperform with NZ$9.56 target (NZ$8.18 at 24 Aug close)

• “AIA delivered a solid FY23 result, underpinned by a significant recovery in passenger volumes, albeit still well below pre-covid FY19 levels.”

• “AIA has guided to FY24 adjusted NPAT of $260m-280m (+82% at the mid-point).”

Eagers Automotive (APE) – Neutral with $14.70 target ($14.23 at 24 Aug close)

• “The supply environment in the second half will support earnings, however this is likely to coincide with a weaker demand environment , drive a reduction in the order book and putting pressure on CY24 GP margins.”

Judo Capital (JDO) – Neutral with $1.15 target ($1.02 at 24 Aug close)

• “While not prohibitively expensive (~14x 1Y fwd PE vs majors at ~11-18x), large expected swings in JDO's margin and a negative trajectory leave us less confident on the outlook.”

Lovisa (LOV) – Neutral with $22.35 target ($21.23 as 24 Aug close)

• “Comps have started to slow, with LOV to defend CSG of +12.5% over 1H in full. We see this remaining an overhang given fewer price rises over FY23 for FY24 from which to benefit, along with a softer consumer.”

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