The Match Out: ASX rallies, banks lead, Materials look tired
The market continued its trend of being a choppy mess, today rallying by +1.3% after falling on Friday by a similar amount. The influential banks were strong pushing the broader financial sector +2.46% higher while the Materials look tired after a cracking run of late, today falling -0.34% to be the only sector in the red. We posed the question in this morning's Macro Monday report Has Russia created a blow off-off top in commodities? Click here to read.
- The ASX 200 finished up +85pts/ +1.21% at 7149
- The Financial sector was best on ground (+2.49%) while Healthcare (+2.16%) was also strong.
- Materials (-0.34%) dragged the chain while the Utilities (+0.28%) underperformed the broader strength.
- US Futures opened higher this morning and that created a positive backdrop for our market on open, we went against weakness in Asia.
- China has imposed partial lockdowns in the major commercial hubs of Shanghai and Shenzhen as it grapples with a surge in COVID-19 cases.
- UK facing stocks rallied today, Pendal (PDL) +6.56% and Virgin Money (VUK) +4.96% - we own the latter and increased sub $3.
- Elders (ELD) +11% on guidance upgrade, the trend in the Agricultural sector remains hot!
- Magellan (MFG) -1.41% saw more fund outflows, although the stock was off over ~5% at its worst, hitting a new 7-year low in the process.
- Banks were a standout, ANZ +2.8%, CBA +2.6%, NAB +1.5% & Westpac (WBC) put on +2.5%.
- Uranium prices were down overnight, Uranium stocks fell overseas and that filtered into weakness here, Paladin (PDN) -7.5%, a very volatile area of the market.
- Iron Ore was down 3.5% in Asia
- Gold was fell another US$15 in Asia today, to be around $US1973 at our close
- Asian stocks were mostly lower, Hong Kong fell -3.21%, Japan +0.36% while China was off -1.35%
- US Futures are all higher, up between +0.45% for Nasdaq & 0.71% for the Dow.
Elders (ELD) $13.32
ELD +11%: the agricultural services business jumped to more than decade-highs today on the back of a strong trading update. Full-year guidance was given for the first time in FY22 for the September year-end, the company predicting EBIT growth twice as strong as consensus estimates, in the range of 20-30%. They’ve benefitted from strong conditions across the sector with bumper crop volumes, strong livestock prices and a broad increase in activity across their business lines. Clearly a solid update and while management has been doing well to improve the business, it’s clearly been given a head start this year with strong macro tailwinds. They’ve left the door open for a miss in case of supply chain disruptions, weather events or a sharp move in commodity prices.
Magellan (MFG) $14.00
MFG -1.41%: Down today after updating the market on Funds Under Management (FUM). They now have $69.1bn under management which compares to around $118bn at its peak last year. Since their last update on the 25th Feb, there have been net outflows of ~$5bn, $4.7bn from institutions & $300m from retail. They now manage $39bn in Global Equities., $20.4bn in infrastructure & $9.5bn in Aussie Equities. Clearly not a good trend here and while the market is expecting outflows, we suspect that these outflows need to bottom out or at least reduce in magnitude before the stock will bottom.
- Dicker Data Rated New Overweight at Morgan Stanley; PT A$16
Enjoy your night
The Market Matters Team
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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...