The Match Out: ASX falls, Bond yields rise as volatility remains

James Gerrish

Market Matters

A tough day at the office for some areas of the market with a few stocks dropping double digits on weaker-than-expected updates, while interest rate sensitive sectors were back on the nose as US 10-year yields break above 4.1% e.g. Consumer Discretionary, Tech, and Healthcare. There was certainly no real bargain hunting on show, understandable as the Fed meeting looms in less than 2-weeks, “if in doubt stay out!”.

  • The S&P/ASX 200 fell -69 points / -1.02% to close at 6730
  • Energy (+3.13%) and Financials (+0.04%) led the line.
  • IT (-3.76%), Materials (-2.43%) and Healthcare (-2.13%) all dropped more than twice the market.
  • It seemed more a case of accepting lower levels after a weak open as opposed to aggressive Intra-day selling even as US Futures slipped off another -0.6% at one point during our time zone, only to bounce back late.
  • Energy stocks continue to outperform both the market and the underlying crude oil price as they make hay while the sun shines.
  • Woodside (ASX: WDS) +6.18% booking a record quarter and upgraded full-yearr guidance.
  • Sandfire (ASX: SFR) -13% knocked on a weak quarterly – lots of work to do to meet FY guidance now.
  • Megaport (ASX: MP1) -11.80% down again as the market shows its lack of tolerance for high valuations that aren’t supported by big growth rates.
  • The banks continue to exhibit resilience to rising yields as 3 of the Big 4’s dividends loom in November – the financial sector finished higher.
  • Suncorp (ASX: SUN) +3.1% rallied on a broker upgrade.
  • Magellan (ASX: MFG) -4.81% fell despite laying out a pathway back to $100bn in FUM at their AGM today – better performance the first thing that needs to happen!
  • The unemployment rate stayed stable at 3.5% in September.
  • Iron ore was lower in Asia, down 2.5%
  • Gold was flat at $US1631/oz
  • Asian markets were mostly lower, the Nikkei in Japan was off 0.70%, while Hong Kong fell 1.8% and China was flat
  • US Futures are marginally lower, S&P -0.13%

ASX 200 Chart

Woodside Energy (ASX: WDS) $34.56

WDS +6.18% Was a rare beacon of green today following their record output in the September quarter with sales up 70% to $9.3bn thanks in part to the acquisition of BHP’s Petroleum division. They also increased full-year guidance in an update that was hard to fault.

Sandfire Resources (ASX: SFR)

SFR – 13.23%: The copper miner was hit hard today following a weaker-than-anticipated 1Q result, both in terms of production lower which pushed up costs – a similar sort of story that we’ve seen from a number of mining companies this quarter. This dynamic undermined cash generation in the period and they are now heavily reliant on a strong 2H to achieve full-year guidance. Just when SFR has locked together a couple of solid operational updates, we get a poor one and given the market was starting to warm to them – MM included – this result saw a bigger share price reaction than it probably should have.

Broker Moves

  • Suncorp Raised to Overweight at JPMorgan; PT A$13.25
  • Insurance Australia Cut to Neutral at JPMorgan; PT A$5.40
  • Silex Systems Rated New Buy at Canaccord; PT A$4.23
  • 29Metals Cut to Reduce at CLSA; PT A$2.30
  • Beach Energy Raised to Buy at CLSA; PT A$1.94
  • Bapcor Cut to Neutral at Credit Suisse; PT A$6.60
  • Beach Energy Raised to Add at Morgans Financial Limited
  • Cronos Australia Cut to Hold at Bell Potter
  • Costa Raised to Outperform at Credit Suisse; PT A$2.50
  • 29Metals Cut to Sell at Canaccord; PT A$1.90
  • Adrad Holdings Rated New Add at Morgans Financial Limited
  • Whitehaven Cut to Negative at Evans & Partners Pty Ltd; PT A$9

Major Movers Today

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James Gerrish
Portfolio Manager
Market Matters

James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...

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