The Match Out: ASX rallies, IT and Financials top performers, China plans coal intervention, Good sales update from Kogan

James Gerrish

Market Matters

The ASX rallied today although it did finish around 35 points below the morning high and there was a big market on close (MOC) order that sent the index around 15 points lower in the match. But still, the market continues to climb the wall of worry, no doubt frustrating the bears in the process. IT stocks led the line again today, up more than 1%, while Energy stocks fell by a similar margin. 

  • The ASX 200 added +39pts /+0.53% to 7413.
  • IT & Financials were strong, up around 1% a pop while Energy and Communications were the major drags, Telstra (ASX: TLS) back down to $3.75 is starting to look somewhat appealing again.
  • Bapcor (ASX: BAP) is a car parts business we like but don’t own – Morgans upgraded today, sending shares up 5%.
  • Citi is optimistic on A2 Milk (ASX: A2M) ahead of its investor day next week following positive updates from competitors Danone and Bubs (ASX: BUB). Danone’s September quarterly showing all three of its infant formula channels in China were growing again. A2M finished +6% higher.
  • Coal stocks were hit today as China looks to intervene in the hot market – more on that below.
  • Kogan (ASX: KGN) +6.68% on a good trading update - Harry covers this below.
  • Investsmart (ASX: INV) +11%, a company I keep an eye on and own a few shares in given it’s a competitor to MM, delivered a decent trading update today. While it is not profitable, the company now has the foundations to grow funds under management, which is the key. I suspect if Investsmart continues to attract FUM as it has been, the market cap won’t hang around $48 million for long.
  • Gold was higher in Asia, +$US5 to $US1774, Iron Ore Futures were flat.
  • Asian markets were all up, Japan up +0.03%, Hong Kong +1.2% while China added +0.57%.
  • US Futures are trading a touch lower.

ASX 200 chart

Whitehaven Coal (ASX: WHC) $3.05

WHC -7.85%: Coal stocks generally were hit today after China’s top economic planner said it is studying ways to intervene in the coal market as the government tries to rein in rising prices and curtail shortfalls. Intervention can be a negative (clearly), but ultimately it speaks to the tightness in the market – though it’s difficult to see what they can do that will have any substance in the short term. This is a longer-term issue and one that will persist until investment in other areas ramps up further. In Australia, WHC was down by as much as 10%, Yancoal -7% while in Hong Kong: Yanzhou Coal fell by as much as 12%, China Coal Energy -8.6%, Shenhua Energy -7.7%.

MM remains bullish WHC and a buyer of dips for now.

Whitehaven Coal (WHC) (ASX: KGN) $11.66

KGN +6.68%: The online retailer was out with a business update today which sent the stock to 7 week highs. The new financial year has started strong with sales up 21% on 1Q21 and while profit was down marginally vs the same period last year, it was 31% higher than the previous quarter. Kogan has been struggling with inventory issues however these now seem to have passed with some discounting helping to move stock. With overflow warehouses now cleared, Kogan is saving $0.8m/month in costs. Recently launched member program Kogan First had a 64% jump in numbers which should help support repeat customer activity. All in a strong update giving them a positive set up into Christmas.

MM is bullish KGN

. (KGN)

Broker moves

  • Senex Cut to Sector Perform at RBC; PT A$4

  • BHP Raised to Add at Morgans Financial Limited; PT A$46.05

  • IDP Education Cut to Hold at Morgans Financial Limited

  • Bapcor Raised to Add at Morgans Financial Limited; PT A$8.45

  • Flight Centre Cut to Underperform at Jefferies; PT A$16

  • BHP Cut to Hold at Jefferies; PT A$40

  • Rio Tinto Cut to Hold at Jefferies; PT A$100

  • Sovereign Cloud Rated New Buy at Canaccord; PT A$1.05

  • Sunrise Energy Metals Lt Cut to Neutral at Macquarie; PT A$2.10

  • Domino's Pizza Enterprises Raised to Buy at CLSA

  • Aurizon Reinstated Sector Perform at RBC; PT A$3.60

  • Senex Cut to Neutral at Credit Suisse; PT A$4.47

  • Aussie Broadband Ltd Reinstated Neutral at Credit Suisse

  • Orora Raised to Buy at Jefferies; PT A$3.50

  • Nine Entertainment Rated New Overweight at Barrenjoey; PT A$3.40

  • Domain Holdings Rated New Equal-Weight at Barrenjoey; PT A$5.70

  • Senex Cut to Hold at Bell Potter; PT A$4.25

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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