The Match Out: ASX finishes soft month on the front foot

A positive end to a soft month for markets, although when all was said and done, the ASX down -1.42% (excl dividends) was a reasonable outcome given we were down ~4.5% at the worst. The last 4 days have seen a strong rebound as expectations around future rate hikes ease.

Today marks the end of FY23 reporting, although there will be a few stragglers that come out late, normally with bad news! Interestingly enough, the only two sectors to finish higher during August were discretionary retail (+4.64%) and property (+0.99%), the two sectors that many fingered as having most risk ahead of results! Further still, the defensive/safe Utilities & Staples were the two weakest links, showing the importance of retaining an open mind, particularly in this market.

• The ASX 200 finished up +7pts/ +0.10% at 7305 – a choppy day really.
• The Communication sector was best on ground (+0.98%) while IT (+0.77%) & Financials (+0.62%) were the other standouts.
• Energy (-2.67%) and Consumer Staples (-1.44%) the weakest links.
• Sandfire (ASX: SFR) +2.76% rallied on solid FY23 results, although no real new news.
• Magellan (ASX: MFG) -5.79% tanked on an article saying Regal was largely covering a short when they bought Chris Mackay’s line – more on that below.
• Harvey Norman (ASX: HVN) +5.21% beat at the profit line.
• IGO (ASX: IGO) +5.45% rallied on an inline result although the dividend was a lot bigger than expected, 60cps including a special.
• Weed stocks didn’t react to news that the US is set to lower the risk category – Cann Group (ASX: CANN) flat.
• Iron Ore was higher again in Asia.
• Gold was trading at US$1943 at our close.
• Asian stocks were mixed Hong Kong up -0.42%, Japan +1.02% while China was off -0.53%
• US Futures are largely flat.

ASX 200 - Intraday

ASX 200 - Daily

Sandfire Resources (ASX: SFR) $6.68

SFR +2.76%: Some intra-day volatility in the copper producer today following their FY23 results, with the stock down early before ending higher. Most metrics were well understood beforehand given the recent quarterly. They did announce US$75m additional capex but everything else looked solid. The Motheo commissioning is underway to 3.2Mtpa with the 3.2Mtpa expansion on track for Q2-FY24. Mining licence for extension obtained last week with Botswana Department on Mines.

• Not many pure-play copper producers listed on the ASX, and while we are bullish on SFR, we get the sense the market has a more positive view on than perhaps it deserves, simply from a scarcity perspective.

Magellan Financial Group (ASX: MFG) $8.95

MFG -5.79%: hit hard today from 2.30 pm onwards when an article dropped that said Regal’s (RPL) purchase of ~$112m in MFG stock from founder Chris Mackay at $9.40 was more about short covering than a play for the asset manager. While it seems likely that some of the purchase did cover a short, there is every chance that the trade would send them from net short to net long. In any case, the stock didn’t react favourably when it was thought RPL had made an outright long bet, so why has the stock fallen so much on this machination of the scrip.

• We think MFG is a buy <$9 into this news and subsequent share price dip.

Sectors in August 

Stocks in August 

Broker Moves

• Kelsian Group Cut to Hold at Ord Minnett; PT A$6.27
• City Chic Cut to Underweight at Wilsons; PT 37 Australian cents
• Brambles Cut to Neutral at Citi; PT A$16
• City Chic Cut to Neutral at Evans & Partners Pty Ltd
• Flight Centre Raised to Outperform at Macquarie; PT A$24.85
• Kelsian Group Cut to Accumulate at CLSA; PT A$7.50
• EML Payments Cut to Sell at CLSA; PT 90 Australian cents
• Dicker Data Raised to Neutral at JPMorgan; PT A$8.40
• Life360 GDRs Rated New Buy at Jefferies; PT A$14
• Healius Raised to Hold at Jefferies; PT A$2.70

Major Movers Today 

Enjoy your evening
The Market Matters Team

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