The Match Out: A tough week but the ASX finishes on a strong note, Index +2.19% with broad based buying

An aggressive bounce back today for local stocks with the ASX 200 ripping +2.19% higher recouping all of yesterday’s declines and some. Stocks opened higher, sold off fairly hard then spend the rest of the session rallying with the buying broad based. We wrote this morning that significant market crashes occur for a reason, whether it’s a credit event like the GFC via subprime loans or a global pandemic that forces an economic shutdown, for now, in MM’s view this is a market readjustment based on a change in interest rate expectations, not something more sinister and we believe a decent bounce is close at hand. As we look back on today’s session, we clearly bounced hard while we also outperformed other Asian markets and US Futures. The little ASX has good form picking major trend changes and for now at least, the buyers have once again re-emerged – let’s see if the US follows our lead tonight.  

• The S&P/ASX 200 added +149points / +2.19% to close at 6988.
• Consumer Staples (+3.27%) & Consumer Discretionary stocks (+3.26%) led the line while the recently hot Energy sector only gained +0.82% - understandably used as a funding vehicle.
• Technology bounced +1.58% however it still underperformed in the recovery – that said, some stocks did well with HUB24 (ASX:HUB) +7.49% an obvious standout.
• A huge day for BHP (ASX:BHP) (+2.74%) with 377m shares changing hands as the index rebalance happened on the close – you don’t see volume like that too often with BHP typically trading around ~15m shares a day. BHP now the biggest index weight in Australia.
• Newcrest (ASX:NCM) -6.36% was a drag today after a below par quarterly update – we hold this in the Flagship Growth Portfolio and while we don’t think the update was as bad as the market priced, the market is always right!
• Staying on the negative, Pointsbet (ASX:PBH) +0.8% managed a small gain today after releasing their quarterly update, they’re growing but it’s costing them a lot in marketing to do it with cash burn or ~$50m in the quarter. Goldman’s said the report was decent however we were less impressed.
• Resmed (ASX:RMD) -0.48% was also out with a quarterly this morning that was slightly underwhelming relative to fairly high market expectations. Revenue of $895m v $921.6m expected dropping to a similar small miss at the profit line.
• Insignia Financial Group (ASX:IFL) +7.90%, which is the old IOOF bounce well today following a strong update in a weak market yesterday. We had flagged IFL as a stock to reduce in our income portfolio and we may still do that however the update was a strong one and the market now appreciating it a little more favourably.
• One area to look at for income investors is the listed trust space, many of these more secure vehicles like MXT have been trading well above NTA making them hard to buy, when volatility kicks up holders use them as a funding vehicle and they track back to NTA of below. Nothing has changed in the quality of the underlying assets. MXT closed at $2.03 today, still marginally above NTA which sits at $2.0074.
• We made a number of changes to the MM Flagship Growth Portfolio today as detailed in the Email and SMS alerts sent to members this morning.
• Iron Ore was strong in Asia up ~4%.
• Gold was flat after a tough few days at US$1799 at our close.
• Asian markets mixed, Japan up +2%, Hong Kong -0.91% and China +0.13% - the ASX a relative outperformer from a regional perspective.
• US Futures are pricing a higher open, up 1% for the Nasdaq.

ASX 200 Chart

Sectors this week

Source: Bloomberg

Stocks this week

Source: Bloomberg

Broker Moves

• Boral Rated New Overweight at Barrenjoey; PT A$6.60
• Seven Group Rated New Overweight at Barrenjoey; PT A$26.50
• OZ Minerals Cut to Neutral at Macquarie; PT A$26
• Mincor Cut to Neutral at Macquarie; PT A$1.70
• Cooper Energy Cut to Underperform at Macquarie
• OZ Minerals Raised to Buy at Citi; PT A$29.10
• 3P Learning Cut to Equal-Weight at Morgan Stanley; PT A$1.80
• Premier Investments Raised to Outperform at Credit Suisse
• Ansarada Group Cut to Hold at Moelis & Company; PT A$2.17
• Nickel Mines Cut to Hold at Jefferies; PT A$1.50
• Evolution Raised to Overweight at JPMorgan; PT A$4.60
• OZ Minerals Cut to Hold at Jefferies; PT A$27.50
• Evolution Raised to Add at Morgans Financial Limited; PT A$4.21
• Ansarada Group Cut to Hold at Morgans Financial Limited
• Aurizon Rated New Neutral 1 at Barrenjoey; PT A$3.80
• BetMakers Technology Raised to Buy at Jefferies

Major Movers Today

Enjoy your night

The Market Matters Team.

Make informed investment decisions

At Market Matters, we write a straight-talking, concise, twice daily note about our experiences, the stocks we like, the stocks we don’t, the themes that you should be across and the risks as we see them. Click here for your free trial.

The Match Out will be available each day after the market close. Follow my profile to be notified when the latest report is live.