The Match Out: ASX gives up early strength, 10-years back above 4%, AUD sub 63c

James Gerrish

Market Matters

The ASX gave up some early strength to close lower today with most action taking place in bond & currency markets which proved the key influence on stocks, the Australian 10-year yield back above 4% while the Australian dollar remained under pressure at 62.75c around our close.

  • The ASX 200 finished down -22pts/ -0.34% at 6645
  • The broad Industrials were best on ground (+0.40%) while Utilities (+0.10%) also finished marginally higher.
  • Energy (-1.59%) and IT (-0.96%) the weakest links, though Property was also soft down -0.94%.
  • Australian 10-year yields were back up above 4% climbing 11 basis points today.
  • US bond markets were also back trading (they were closed overnight) with the US 10 years +10bps to 3.98%.
  • As bond yields rose, US Futures tapered off and that dragged the ASX from being up ~30pts to down by the same margin.
  • Baby Bunting (ASX: BBN) -20.51% was hit following comments at their AGM today around margin pressure – we’ll have more on this in tomorrow’s Portfolio Positioning Report.
  • Orica (ASX: ORI) +4.36%%, said their CFO will depart at the end of the year, however, the fertilizer and chemicals business has a ready-made replacement + they guided to higher than consensus EBIT at the full-year results due in November.
  • Megaport (ASX: MP1) -4.91% typifies the volatility amongst tech at the moment, MP1’s moves are a magnified version of the broader sector dictated by the prevailing direction of yields.
  • Dalrymple Bay Infrastructure (ASX: DBI) +6.19% was strong on the back of upgraded guidance - more on this below.
  • Whitehaven Coal (ASX: WHC) -0.77% was cut to sell at Citi this morning – the stock fell ~3% early then recovered nearly all of the early losses, brushing off the call, which reading the detail was not that bearish of a note.
  • Sandfire Resources (ASX: SFR) -3.91% was also downgraded to a Sell from Goldmans, a negative view on global growth and thus Copper price to blame – stock was down 3.91% at $3.69
  • Research Lead Shaw Hickman was on Ausbiz this morning talking about the influence of Bond Yields on the equity market – Watch Here
  • Iron Ore was ~2% lower in Asia today, Fortescue (ASX: FMG) followed suit down 2.21%
  • Gold was down overnight and flat in Asia at ~US$1665 at our close.
  • Asian stocks were down, Hong Kong lost -2.16%, Japan fell -2.7% while China was off -0.10%
  • US Futures are all lower, off around -0.50%

ASX 200 Chart

Dalrymple Bay (DBI) $2.23

DBI +6.19%: the port owner upgraded guidance on the back of relaxed regulation, sending the stock higher today. The terminal infrastructure charge will increase to $3.18/t, applied retrospectively from July 1, 2021, bringing in a windfall of $61m for the backdated charges. The new price is an increase of 29% on the previous agreement which rolled off last year. Distribution guidance for the remainder of the year has been increased 10% to 20.1cps, and 3-7% growth p.a. over the medium term is now expected on the new pricing model. It’s taken longer than expected to secure the pricing increase, however, today’s update provides more certainty around earnings and income for shareholders for a number of years, creating a low risk earnings stream.

Broker Moves

  • South32 Raised to Buy at Citi; PT $4.60
  • Nickel Industries Cut to Neutral at Citi; PT 90¢
  • 29Metals Cut to Neutral at Citi; PT $2.50
  • Deterra Raised to Buy at Citi; PT $4.80
  • Whitehaven Cut to Sell at Citi; PT $8.30
  • Alumina Raised to Buy at Citi; PT $1.60
  • Global Lithium Resources Rated New Speculative Buy at Canaccord
  • Deterra Raised to Buy at Goldman; PT $4.70
  • South32 Cut to Neutral at Goldman; PT $3.70
  • Sandfire Cut to Sell at Goldman; PT $3.50
  • Alumina Raised to Neutral at Goldman; PT $1.30

Major Movers Today

Have a great night

The Market Matters Team

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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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