The Match Out: ASX is higher but resources lose steam, and Tech is starting to find some love!

The ASX traded higher today although fell away from its best levels seen in early trade – weakness amongst the resource sector the major influence at the index level with BHP & Fortescue alone taking ~20 points off the index.

NB: There was an issue with closing prices this afternoon in the included tables.

• The ASX 200 finished up +22pts/ +0.31% at 7203
• The IT sector was best on ground (+1.70%) while Industrials (+1.55%) & Financials (+1.42%) were also strong.
• Materials (-1.40%) and Healthcare (0.01%) the weakest links.
• Market Matters Research Lead Shawn Hickman was on Ausbiz this morning covering Lithium & the US Dollar – Watch Here
• CSL (ASX: CSL) -0.39% trickled lower after announcing the retirement of long-standing CEO Paul Perreault who will retire after 10 years in the top job and 25 years with the company. They appointed current COO Dr Paul McKenzie to the role.
• A number tech stocks started to move today, catching our eye. A few false dawns have played out and US CPI will be a major influence tonight, however, it seems to MM like there is some more sustainable momentum building here as the laggards in the sector attract some interest – Xero (ASX: XRO) +3.33% and Megaport (ASX: MP1) +5.95% both cases in point.
• Bendigo Bank (ASX: BEN) +6.86% rallied on a better-than-expected trading update with cash earnings of $245m for the 5 months to 30 Nov is up 22% on pcp and around 15% ahead of consensus – margins were also better with exit margins >2% showing good leverage to rising cash rates. We plan to discuss this tomorrow morning along with our views on the broader banking sector.
• G8 Education (ASX: GEM) +2.5% edged higher after saying that 2H to date (5 months) was seeing decent improvement. GEM is a Dec year-end and while conditions remain tough, particularly around staff shortages, there are green shoots emerging. We’ll update our views on this income portfolio holding in tomorrow’s portfolio report – it’s an interesting one.
• Dexus (ASX: DXS) +1.64% edged higher to close at $8.06 – we think it’s time to step up on this one for income focussed investors that love a bargain! Straw hats in winter as JBW would say!
• Chalice Mining (ASX: CHN) – 8.06% hit hard after the miner said a scoping study at its Julimar project will be extended and continue into next year. Lots of holders hanging their hats on these results that were due for release at the end of this year, they are now saying a timeline will be provided at the end of 1Q23.
• In the update, UBS went on to talk about China’s reopening, the global power crisis and supply disruptions, highlighting these as key themes for 2023.
• Given that backdrop, they like exposure to commodities that stand to gain from the energy crisis, including coal (we own Whitehaven (ASX: WHC) and New Hope (ASX: NHC), or those with decent drivers in the medium term such as lithium (we still have reduced exposure through IGO and GL1). They also like gold in 2023 as it could benefit from a Fed pivot. (we own NCM, Evolution Mining (ASX: EVN) and St Barbara Limited (ASX: SBM).
• Iron Ore was ~2% lower in Asia today hurting Fortescue (ASX: FMG) which fell -4.21% & RIO which was off -1.93%.
• Gold was flat at ~US$17 83 at our close. St Barbara is in a trading halt but a number of upgrades coming through as a result of the Genesis deal.
• Asian stocks were mixed, Hong Kong up +0.30%, Japan +0.43% while China was down -0.10%
• US Futures are all up, around +0.10%
• US Inflation tonight, consensus looking for CPI of +7.3% down from +7.7%

ASX 200 Chart

Broker Moves

• SiteMinder Ltd Rated New Overweight at Wilsons; PT A$4.07
• Vulcan Steel Rated New Underweight at Jarden Securities
• F&P Healthcare Cut to Equal-Weight at Morgan Stanley
• St Barbara Raised to Buy at Citi; PT 90 Australian cents
• Inghams Rated New Sell at Jarden Securities; PT A$2.18
• St Barbara Raised to Outperform at Credit Suisse; PT A$1.25

Major Movers Today

Have a great night,

The Market Matters Team.

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