The Match Out: ASX slides as BoJ tweak policy, Domain (DHG) downgrades on lower listings

Certainly, a risk-off day for stocks right across the region following the Bank of Japan’s (BoJ) move to tweak their yield curve control program where-by they’ll allow the 10-year bond yield to rise to 0.5%, up from the previous upper limit of 0.25% - hardly a blip compared to what other bond markets have experienced but big in the context of how the BoJ have previously operated. That sent Japanese stocks & other Asian markets sharply lower, along with US Futures and the weight of those moves clobbered the ASX down over 100 points as sellers ran into light holiday volumes.

• The S&P/ASX 200 lost -109 points / -1.54% to close at 7024
• Utilities (-0.15%) & Financials (-0.24%) were the relative performers but still closed lower.
• IT (-4.38%), Real-Estate (-3.79%) and Consumer Discretionary (-3.53%) all took one on the chin.
• The market had attempted to recover from early declines after the RBA’s last meeting minutes were released, which showed some consideration was given to pausing on rates before they sided with a 25bps increase. Clearly, the pivot on rates is coming early in 2023, however, given some of the company updates/guidance downgrades that have come out in the last 48 hours, the concern is clearly around damage already done – with fears around recession / sharply lower growth now front of mind.
• The AUD was also hit as ‘risk-off’ washed through the market, down ~1% on the session to be US66.31c at our close.
• Higher bond yields hit Tech and other interest rate-sensitive sectors today like property, and given the relative strength in the market’s most dominant sector (financials) with higher rates a positive for margins, it speaks to how aggressive the selling was elsewhere.
• Domain Holdings (ASX: DHG) -9.12% said lower listing volumes would hurt 1H23 earnings, with EBITDA guidance now for $42m down from $62m leaving a lot of work to do in the 2H to meet to $137m currently expected – seems a pipe dream and downgrades will flow.
• Nine Entertainment (ASX: NEC) –5.82% fell as a result of this update, they own 60% of DHG which contributed ~14% of earnings last year, although they did reconfirm 1H guidance today for Ebitda of $370m.
• REA Group (ASX: REA) - 7.73% also caught in the crossfire with the negative read-through on listings from the No 2 player not boding well for them.
• City Chic (ASX: CCX) -31.36% woes continue for the + size retailer with lower revenue & higher costs eroding margins, and they now expect to book a loss in the 1H versus a positive EBITDA contribution of +$5m that was based on their AGM guidance. They still have a stack of inventory and low cash – this one would be a concern for holders.
• BWX -53.17% was back on the boards which in itself is a miracle – the maker of Sukin and Mineral Fusion natural skincare brands had delayed publishing FY22 accounts and now say earnings over the last 2 years have been sharply lower + they also cut FY23 guidance.
• Oz Minerals (ASX: OZL) +1.42% up today on growing certainty that BHP will complete the takeover despite needing some additional time to dot the I’s and cross the T’s.
• Iron Ore was flat in Asia – ditto for Coal out of Newcastle.
• Gold ticked higher, trading $US1791/oz at our close.
• Asian stocks were weak, Hang Seng off -2.16%, the Nikkei in Japan fell -2.9%, while China lost -1.23%
• US Futures are down circa -0.8%.

ASX 200 Chart

Broker Moves

• Australian Unity Raised to Buy at Moelis & Company; PT A$1.76
• Region RE Cut to Hold at Moelis & Company; PT A$2.90
• Pro Medicus Rated New Sell at CLSA; PT A$54.25
• Integral Diagnostics Reinstated Reduce at CLSA; PT A$3.15
• SiteMinder Ltd Rated New Outperform at RBC; PT A$4
• Whitehaven Raised to Buy at Citi; PT A$11.10
• Iluka Cut to Sell at Citi; PT A$9.50
• New Hope Raised to Buy at Citi; PT A$6.70
• JB Hi-Fi Cut to Neutral at Credit Suisse; PT A$45.73
• Breville Cut to Underperform at Credit Suisse; PT A$18.61
• PAR AU Rated New Corporate at Edison Investment Research

Major Movers Today

Enjoy your night
The Market Matters Team

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