The Match Out: ASX ends a bullish month up another 1%, are the bears getting nervous? EML slumps on more regulatory pressure

James Gerrish

Market Matters

A choppy but overall positive day to kick off the new week and end the bullish month of October that saw the ASX200 up 6% led by a 12% rise by the Financial Sector. Only two sectors were down in the month, Staples falling -0.19% and Materials -0.11%. That was not a move many predicted with very bearish positioning meeting a less hawkish central bank (in Australia at least) leading to a strong move higher in equities.

  • Today the ASX 200 finished up +77pts/ +1.15% at 6863
  • The Consumer Discretionary sector was best on ground (+2.73%), closely followed by Tech (+2.60%), Telcos (2.04%) and Health Care (+2.01%)
  • Energy was the only sector to close lower today, down -0.44%, while materials also lagged with a gain of just 0.1%.
  • Premier Investments (ASX: PMV) +5.57%, rallied on a good trading update released late on Friday.
  • EML Payments (ASX: EML) -35.71% fell again on more regulatory issues in the UK
  • Deterra (ASX: DRR) -1.92% fell as Iron Ore Royalties declined by ~25%, indicative of the issues facing the broader Iron Ore sector as Iron Ore prices fall through US$80/tonne.
  • Graincorp (ASX: GNC) +7.86% rallied on along with Wheat prices after Russia’s exit from a deal allowing Ukraine crops to move from the Black Sea to the country’s most in need.
  • Bubs (ASX: BUB) -13.79% fell on a weak quarterly t
  • Coal stocks under some pressure today, Whitehaven Coal (ASX: WHC) -4.14%
  • Reports circulating that Tesla (TSLA US) was looking to buy ~20% of Glencore (GLEN LN), a stock we own in the International Equities Portfolio.
  • Citi downgraded Resmed (ASX: RMD) to Neutral with a $37.50 PT, though the stock brushed the change to close up +0.41%
  • AMP +4.56% was actually upgraded by Jeffries to a buy and $1.43 PT.
  • Iron Ore was hit again and is now trading ~US$75 on ongoing Chinese lockdowns, Fortescue (ASX: FMG) fell -0.41% & RIO was off -0.4.
  • Gold was flat in our session at $US1,645, however, the gold stocks were largely weaker.
  • Asian stocks were strong today, Hong Kong was up +1.5%, Japan added +1.6% and China was up just 0.1%.
  • US Futures are all down a touch.

Premier Investments (PMV) $25.03

PMV +5.57%: Rallied today following an update provided aftermarket on Friday, normally a time reserved for downgrades! That wasn’t the case with PMV saying that global sales for the first 12 weeks of 1H23 are +42.8% on 1H22 and +21.7% on 1H20 (pre-covid). Based on the 21.7% growth versus pre-covid numbers, this implies total sales that are around ~10% above the current consensus for the half. Retailers were also buoyed by strong ABS data this morning, where Retail Sales came ahead of expectations at +0.6% MoM.

EML Payments (EML) 40.5c

EML -35.71%: the payment solutions company slumped to a near-10-year low today after further struggles with European regulators. This time the UK has taken action to stop the company from onboarding any new customers to their Prepaid Financial Services business in the UK on similar issues that the company is working with the Central Bank of Ireland to fix. The PFS Card Services business has been under a growth cap due to the issues due to lift at the end of the year, though problems remain and the regulator may extend the limitations. EML said it expects a hit to revenue of less than $5m for FY23, however, it doesn’t provide much confidence that the company is anywhere near being out of the woods yet.

Sectors this month – Source Bloomberg

Stocks this month – Source Bloomberg

Broker Moves

  • Mincor Raised to Buy at Bell Potter; PT A$1.90
  • PWR Holdings Rated New Accumulate at CLSA; PT A$11
  • Raised to Neutral at JPMorgan; PT A$20
  • SkyCity Raised to Buy at CLSA
  • AMP Rated New Buy at Jefferies; PT A$1.43
  • ResMed GDRs Cut to Neutral at Citi; PT A$37.50
  • Iluka Raised to Outperform at Credit Suisse; PT A$10
  • Iluka Cut to Neutral at Citi; PT A$9.50

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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