The Match Out: ASX enjoys ‘final hour of power’, Miners and Energy drive market higher, Uranium rips again

James Gerrish

Market Matters

The final hour of power as one trader on Bloomberg put it this afternoon with the ASX rallying +25points to close up on the day driven largely by the Energy & Material stocks. Uranium stocks on fire again today and plenty of queries from subscribers around our sale of Paladin (PDN) last week ~95c, was it too early? Maybe but we’ll likely get another chance in the sector in MM’s view however volumes are huge – hot money now finding it’s way there. Overall, a decent start to the week for the ASX + US Futures are suggesting a positive open tonight.

  • The ASX 200 finished up +18pts / +0.25% to 7425 – we were back below 7400 at 3.30pm before a late spurt from the bulls
  • Commodities the main game today, Copper stocks did well (OZL +4%) while Energy was also supported (STO) +2%, however most fireworks in the Uranium Sector with Paladin’s (PDN) ~15% rally dwarfed by many of the smaller cap speccy’s in the space. Spot Uranium now US$43/lb up from low 30’s as Sprott changes the dynamics of that market
  • Lithium stocks also bounced from last week’s sell-off, Pilbara (PLS) +7% the best of them with Lynas (LYC), a position we added to last week in the Emerging Companies Portfolio – Click Here – rallied ~5%
  • Sydney Airports (SYD) attracted a revised offer and has opened up their books for DD – Harry covers that below, SYD +4.63% to $8.37
  • UBS took a knife to Magellan (MFG) target saying given weak performance, retail outflows and high fee structure, the stock will come under pressure -- Cut to Sell at UBS; PT $35
  • We made some amendments across four MM portfolios today, increasing our exposure to the material sector in the Flagship Growth Portfolio – Click Here to view the alert
  • Gold stocks edged higher today with the Denver gold show on (September 12-15) which should keep the sector in the headlines. A range of Australian companies (NCM, NST, EVN, RRL, SBM etc) hosting virtual presentations. Watch out for updates and mid-quarter snippets- Evolution (EVN) presented today stock rallied ~4%
  • Spot Gold was flat during Asian trade ~$US1789 at our close
  • Iron Ore Futures were down ~4% today, the Iron Ore names held up okay although underperformed on a relative basis – we continue to think that Iron Ore is ‘looking for a low’.
  • Goldmans today saying that Fortescue Metals (FMG) push to reach net-zero greenhouse gas emissions from its Pilbara iron ore operations by 2030 could cost more than $7B although very hard to quantify / model from what we can tell – but a bid number non-the-less.
  • In Asia, Hong Kong fell ~2%, China also lower while the Nikkei, our preferred Asian index ATM edged +0.20% up
  • US Futures higher, circa ~0.40% at our close

ASX200

Sydney Airport (SYD) $8.37

SYD +4.63%: third time lucky for the bidders today with the suitors calling themselves Sydney Aviation Alliance getting a look behind the curtain of Sydney Airport. The new bid at $8.75/sh is 50c higher than the original offer, and around a 50% premium to SYD shares prior to the first offer coming to light. The Sydney Airport board look likely to recommend, though plenty of hoops still to jump before we get to that point. Due diligence was granted on a non-exclusive basis so if anyone else wants to throw their hat in the ring, they will get to meet the IFM Investors led Sydney Aviation Alliance in the data room. ACCC and FIRB will want to have a good look over the deal as well given the limits on airport ownership. The new price is in line with where shares were trading pre-COVID.

MM is neutral SYD

Sydney Airport (SYD) Weekly Chart

Broker Moves

  • MNF Group Rated New Buy at Barclay Pearce Capital; PT A$7.49
  • AMA Group Cut to Hold at Jefferies; PT 45 Australian cents
  • OZ Minerals Cut to Neutral at JPMorgan; PT A$26
  • Mineral Resources Cut to Neutral at JPMorgan; PT A$57
  • Magellan Financial Cut to Sell at UBS; PT A$35
  • NAB Cut to Neutral at Credit Suisse; PT A$28.50

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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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