The Match Out: ASX rallies, Healthcare the star attraction as CSL gains 5%, Barrenjoey bullish on APX and ALU

After a flat open, the ASX found its mojo by mid-morning. And while US Futures plus Asian markets were positive today, it seemed more a case of the local market leading rather than following. Yesterday, the ASX was resilient – which is a sign of strength – and we also had US stocks down around 1.2% overnight while we rallied +0.85% today. This shows some backbone coming into local stocks. Several recently downtrodden names came back to life today, headlined by a strong advance of around 5% from CSL Limited (ASX: CSL), which helped the healthcare sector lead the line for the ASX 200, ably supported by Energy (+1.62%) and Utilities (+1.36%), although the buying was fairly broad-based, with only the Real Estate stocks finishing lower.

• The ASX 200 rallied around 63points / 0.86% to 7355 – a solid session overall.
• When CSL rallies nearly 5% it’s hard for the index to do anything but rise and that was certainly the case today; what many describe as the best company to come out of Australia accounted for a third of the ASX 200 gains today (around 20 index points).
• The Reserve Bank’s minutes from its December monetary policy meeting show the central bank sticking to the line that it won’t lift rates until it sees stronger wages growth. Stocks were up, the AUD was flat on the back of that.
• Appen (ASX: APX) +3.83% has been under the pump since Macquarie downgraded it and raised concerns over its lack of guidance. But that view was today counter-balanced, with Barrenjoey initiating coverage with a Buy equivalent and a $15.40 price target, APX shares closing today’s session at $10.57.
• Barrenjoey also initiated on Altium (ASX: ALU) +1.71% with a bullish note, again a Buy equivalent but this time with a $50 price target, the most bullish in the market behind Jeffries ($48.83) and Bells ($45). ALU closed today at $42.75.
• Magellan (ASX: MFG) +4.37% was down early with a lot of indecision still obvious, and plenty of hot money now permeating around the stock but rallied late in the day to close at $20.56. A huge barrage of bearish rhetoric is now doing the rounds on MFG, most of which is right but had more substance when MFG was trading at $40-$50, not at $20. Always question what is factored into the price.
• Cimic (ASX: CIM) +3.97% bounced back today after yesterday’s 14% slide.
• Pilbara Minerals (ASX: PLS) -9.06% fell on weaker production guidance, management now expecting to ship between 85,000 and 95,000 tonnes of spodumene concentrate over the December quarter, versus prior guidance of between 90,000 and 115,000 tonnes, with labour shortages wearing the blame. We recently sold PLS in the Emerging Companies Portfolio, looking to buy weakness, but not yet.
• Metcash (ASX: MTS) -2.89%, which is held in the Income Portfolio, traded ex-dividend today for 10.5 cents fully franked.
• Aussie Broadband (ASX: ABB) -1.29% has been weak in recent times, it closed today at $4.58 although ABB hit a low of $4.41. It seems there are some arbitrage traders shorting ABB and buying OTW for the takeover. We’ll look at this more in the morning note tomorrow. We own this stock, having bought at higher levels.
• Iron Ore was higher in Asia today, up +1.69%, Coal was also +2.12% higher and is looking good after a very aggressive pullback, Whitehaven Coal (ASX: WHC) rallied +4.47% (this is a high conviction buy around current levels).
• When China starts to stimulate, as they have just done, China-facing commodities tend to do very well.
• Asian markets were higher, the Nikkei up +1.93%, Hong Kong +0.65% & China +0.40%.
• US Futures are all up, Dow +250pts, Nasdaq +1%.
• …Even Zip Co (ASX: Z1P) rallied +5% today!

Broker moves

• Magellan Financial Cut to Neutral at Macquarie; PT A$20

• Appen Rated New Overweight at Barrenjoey; PT A$15.40

• Altium Rated New Overweight at Barrenjoey; PT A$50

• Technology One Rated New Neutral 1 at Barrenjoey; PT A$12.65

• Nanosonics Rated New Overweight at Barrenjoey; PT A$7.30

• Pro Medicus Rated New Neutral 1 at Barrenjoey; PT A$60

• HomeCo Daily Needs REIT Rated New Overweight at JPMorgan

• Magellan Financial Raised to Neutral at Evans & Partners Pty Ltd

Major movers today

Enjoy your night,
The Market Matters Team

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