The Match Out: ASX falls 2%, Travel stocks supported, China desperate for coal – pushes coal stocks higher

James Gerrish

Market Matters

The ASX suffered a brutal session following US Indices lower to start the 2nd quarter of FY22. Infighting in the Democrats appear to threaten both infrastructure spending and an increase to the Government borrowing cap. We have seen all of this before, it’s political posturing that generally gets resolved however the infrastructure package is very important which is the curve ball in these negotiations.

  • The ASX 200 finished down -146pts / -2.00% to close at 7185
  • A complete opposite of yesterdays session with all sectors finishing lower
  • Energy remains in focus with economies around the world fighting to get their hands on coal, LNG and oil,
  • Virgin Money UK (VUK) announced another £45m in restructuring costs as they look to become the leading digital bank in the UK. It comes with 31 branch closes and around half the money going to more flexible working arrangements. Shares were weaker though, finishing -7.43% - we like VUK into weakness.
  • Coal stocks rallied as the Chinese Government encouraged energy suppliers to secure supplies at all costs. The Government is fearing widespread blackouts as winter approaches. Whitehaven Coal (WHC) topped the leader board +4%
  • Evolution Mining (EVN) +2.29% received state government approval to extend the Cowal gold mine in NSW. They’ll spend $380m to develop the mine, key to hitting their production targets over the medium term and extending the mine life to 2040.
  • Travel stocks stayed buoyant after the PM announced plans to allow international travel starting from next month. Webjet (WEB) was the best adding +2.05%
  • Gold was flat today, US$1755 at our close
  • Iron Ore Futures rallied +6%
  • Japan’s Nikkei Index was off -2.37% at our close. Hong Kong and Shanghai markets were closed today.
  • US Futures were down around -0.4% each at our close.

Sector This Week - Source Bloomberg

Stocks This Week - Source Bloomberg

Broker Moves

  • Jupiter Mines Raised to Neutral at Macquarie
  • Alumina Raised to Neutral at Macquarie; PT A$1.90
  • Clarity Pharmaceuticals Rated New Buy at Jefferies; PT A$2
  • SmartGroup Cut to Accumulate at Ord Minnett; PT A$9.85
  • Zip Co. Cut to Hold at Jefferies; PT A$7.43
  • BHP Group PLC Raised to Buy at SBG Securities; PT 2,070 pence
  • South32 Cut to Hold at Morgans Financial Limited; PT A$3.65
  • Whitehaven Cut to Hold at Bell Potter; PT A$3.50

Major Movers Today

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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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