The Match Out: ASX flat, Banks rally led by Bank of QLD (BOQ)

James Gerrish

Market Matters

The ASX tried to rally today and was looking okay before a large seller pushed the index down 25pts in the match as the intra-day chart shows below. US CPI remains the core focus this week, and a higher number will be taken poorly we suspect, while signs that inflation has peaked will likely be met with solid buying.

  • The ASX 200 finished up +2pts/ +0.04% at 6647
  • The Financials sector was best on ground (+1.89%) while Property (+0.87%) was also strong.
  • Utilities (-2.20%) and Energy (-1.47%) the weakest links.
  • There was a good article in LiveWire from Tim Toohey from Yarra yesterday, with this quote very much summing up our current (more bullish) thoughts on the market To be clear, we are not talking a large cyclical recovery in the global economy, we are not talking about near-term rate cuts, and we are not talking about earnings surprising expectations. What we are talking about is central banks taking their foot off the throat of financial markets and valuation adjustments supporting a better re-entry point for risk markets.
  • Lead Portfolio Manager James Gerrish was on Ausbiz this morning talking about our market views – Watch Here
  • Megaport (ASX: MP1) +2.31% edged higher as the AFR reported this morning that they have been taking pitches from investment banks around a defence mandate – a classic sort of move to get the SP up however there might be some substance.
  • Bank of QLD (ASX: BOQ) +11.13% reported FY22 results that were slightly below consensus in terms of cash earnings but they talked up the
  • Coronado Coal (ASX: CRN) +8.01% confirmed they are in talks to join up with US-listed Peabody.
  • Mineral Resources (ASX: MIN) -3.65% said no decision had been made around their processing plant amid growing media speculation.
  • CSL (ASX: CSL+1.1% edged higher after reconfirming earnings guidance.
  • Iron Ore was weaker in Asia., down around 3% dragging the Iron Ore players lower – FMG (ASX: FMG– 2.78%
  • Gold was flat at ~US$1670, Newcastle Coal +1.7% at $US375
  • Asian stocks were mostly lower, Hong Kong down -1%, Japan -0.26% while China was up +0.21%
  • US Futures are all up, around +0.50%

ASX 200 Chart

Bank of QLD (ASX: BOQ) $7.59

BOQ +11.13%: Rallied strongly today despite cash earnings of $508m being around 1% below consensus while the final dividend of 24cps was inline taking the full year payout to 46c fully franked – a great 6.5% fully franked yield. A bright spot was net interest income up +7% to $797m which was 2.5% above consensus while net interest margins of 1.75% were a 2bps beat to expectations. With total revenue up 2% to $849m and costs down 1%, they are clearly moving in the right direction. They talked to strong(ish) medium-term guidance with margins expected to increase with rising interest rates partly offset by headwinds from wholesale funding.

Broker Moves

  • Collins Foods Rated New Underperform at Barclay Pearce Capital
  • Centuria Industrial Cut to Equal-Weight at Morgan Stanley
  • Charter Hall Long WALE Cut to Equal-Weight at Morgan Stanley
  • GPT Group Cut to Underweight at Morgan Stanley; PT A$4.30
  • National Storage REIT Cut to Underweight at Morgan Stanley
  • Liberty Financial Group Ltd Cut to Neutral at Credit Suisse
  • GTN Ltd Cut to Speculative Buy at Evans & Partners Pty Ltd
  • Tabcorp Raised to Outperform at Macquarie; PT A$1.20
  • Collins Foods Raised to Add at Morgans Financial Limited
  • XPON Technologies Rated New Buy at Shaw and Partners
  • AACO Cut to Hold at Bell Potter; PT A$2.35

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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