The Match Out: ASX breaks through, AGL bows to Grok, Tech bounce continues

James Gerrish

Market Matters

The local market ripped through the 7200 resistance today in a positive start to the week that saw Tech continue its positive momentum. Yields have taken a breather and that has allowed growth names to find their feet again. Materials were also well bid on positive commodity prices, though the energy sector was left behind despite another positive move from oil markets today. Utilities underperformed the broader index and was the only sector to closer down on the day.

  • The ASX 200 finished up +103pts/ +1.45% at 7286.
  • The Tech sector was the best on ground (+4.59%) while Materials (+2.20%) were also strong.
  • Utilities (-0.69%) the only sector to trade lower today, AGL was the main drag.
  • Tech was well bid throughout the session as bond yields consolidate. The more beaten up names were the standouts today.
  • Bubs Australia (ASX: BUB) +40.21%, rallied after receiving FDA approval to sell 7 of their brands into the US market. The news also helped A2 milk (ASX: A2M) bounce 10.42%.
  • AGL Energy (ASX: AGL) -1.69%, fell after scrapping demerger plans for its electricity generation business. Management said it was unlikely to get the required 75% of shareholders to vote in favour of the move.
  • nib Holdings (ASX: NHF) +0.68%, has again postponed its premium rate increase. Policyholders are expected to save around $40 million but nib continues to see lower than expected claims helping support the delay.
  • Liontown Resources (ASX: LTR) +5.3%, has extended talks with Tesla as it works through a 100,000 dry metric tonnes (dmt) offtake agreement.
  • ANZ, +0.35%, is being pursued by ASIC after allegedly overcharging credit card holders on cash advance fees when balances went into credit after depositing cash. It seems like a niche event and shares were unmoved by the news.
  • Iron Ore was around 2.5% higher in Asia today supporting Fortescue (ASX: FMG) +1.33%. Rio Tinto (ASX: RIO) underperformed on talk of further taxes on US dividend payers.
  • Gold was up another +0.5%/$US9 to $US1,862. Gold stocks were well bid today as well
  • Asian stocks were also strong, Hong Kong +1.94%, Japan +2.19% & China was up +2.12%
  • US Futures are all up strongly. S&P up 0.9%, Nasdaq +1.5%, though the US market is closed tonight for Memorial Day.

ASX 200 chart

Bubs Australia (ASX: BUB) 68c

BUB +40.21%: the infant formula company received FDA approval to sell tins into the US market today. America has been battling a shortage in infant formula after several brands were forced to recall products that had led to bacterial infections in a number of kids while supply chain issues have compounded the problem. As a result, the FDA fast-tracked the process to have seven of Bubs’ products available for sale in the states with 500,000 tins ready for immediate exportation. Bubs have confirmed an additional 750,000 tins would be made available in the coming months while also looking to increase production at their FDA registered facility to triple capacity. Heading into the announcement, Bubs had around 13m shares short sold, contributing to the early spike in the share price.

Bubs Australia

AGL Energy (ASX: AGL) $8.72

AGL -1.69%: Australia’s biggest energy retailer has scrapped plans to demerge its generation business with the Chairman and CEO stepping down as a result of the failed move. The company said it was unlikely to reach the 75% approval vote from shareholders with Mike Cannon-Brooks’ Grok Ventures lobbying against the demerger and launching a takeover offer to challenge it. Management held 11.38% of the voting rights, and with other notable shareholders coming forward to block the plans, AGL had no choice but to back down. A review is now underway and AGL is expected to engage with Grok Ventures to formulate a plan to move forward. Shares are trading well above the takeover price of $8.25/sh.

AGL Energy

Broker moves

  • Capricorn Metals Raised to Buy at Canaccord; PT A$4.20
  • Mineral Resources Rated New Hold at Jefferies; PT A$62
  • Allkem Rated New Buy at Jefferies; PT A$16.50
  • Pilbara Minerals Rated New Hold at Jefferies; PT A$2.80

Major movers today

Have a great night,

The Market Matters team.

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James Gerrish
Portfolio Manager
Market Matters

James is Portfolio Manager & Primary Author at Market Matters, a daily investment report with over 2500 subscribers that offers real market insight. He is also Senior Portfolio Manager within Shaw and Partners heading up a team that manages...

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