The Match Out: ASX ticks higher, Employment numbers print stronger than expected

The ASX ticked up to the highest level in more than a week on the back of strength in both mining and financials stocks early on. The advance was halted by stronger-than-expected employment data with the Australian economy adding 76k jobs in May and the unemployment rate falling to 3.6% - the strong data lifting expectations of another, if not two more hikes by the RBA in the next few months. The index gave back all the early gains to trade marginally lower around midday, though buyers returned into the afternoon to help eke out a small gain. Healthcare was again the laggard while Tech continues to show strength.

• The ASX 200 finished up +13pts/ +0.19% at 7175
• The Tech sector was best on ground (+0.96%), followed by Financials (+0.79%), Industrials (+0.73%) and Real Estate (+0.69%) as the other notable gainers.
• Healthcare (-1.97%) was the worst of the sectors again today thanks follow through selling in CSL. Utilities (-0.5%) and Telcos (-0.32%) the other notable detractors.
• Unemployment came in stronger than expected this morning printing 3.6% for May from 3.7% in April, and above expectations for a steady jobless rate. The economy created 76k new jobs well ahead of expectations while the participation rate ticked up to 66.9%.
• Clearly a better number which puts further pressure on the RBA to move in July as well as August, Australian bond yields reflecting that fact with the 2-year yield up 0.10% today to 4.02%.
• Lynas (ASX: LYC) -6.51% was downgraded to a hold by UBS today. The analyst cited risks around the new Kalgoorlie plant due up and running in a matter of weeks while NdPr prices seem to face some near-term headwinds.
• Charter Hall (ASX: CHC) -0.83% updated asset valuations for their platform properties, reducing the valuation by an average of 2.8% while the cap rate increased 32bps. Equity investors have already taken a knife to valuations with most property stocks trading on a discount to NTA. Long Wale (-7.8%) and Office (-3.7%) were the hardest hit by the changes.
• SRG Global (ASX: SRG) +2.92% won a $40m contract for façade work in Circular Quay, Sydney. The deal takes their total contract wins to $1.055b for the Financial year.
• Iron Ore was up +1% in Asia today. Fortescue (FMG) jumping 3.59% was the best of the linked stocks.
• Gold was down ~$US7/-0.4% in Asian trade, hanging around $US1935/oz, most gold stocks were softer.
• Asian stocks were mixed, the best was the Hang Seng +1.4%, China +0.50%, while the weakest was Japan’s Nikkei -0.05%
• US Futures are trading largely flat to a touch lower at our close.

ASX 200 Chart

Resources Webinar

Today's webinar on the outlook for the resources sector and the stocks to consider in light of the global energy transition and decarbonisation just finished. The webinar covered the strong performance of the technology sector compared to resources, raising the question of whether the gap has widened too much. We also highlighted certain commodities' crucial role in driving the energy transition.

Broker Moves

• Lynas Cut to Neutral at UBS; PT A$8.30
• Aurizon Raised to Overweight at Jarden Securities; PT A$3.80
• Lovisa Cut to Sell at Citi; PT A$16
• Mt Gibson Raised to Outperform at Macquarie
• CSL Cut to Hold at Jefferies; PT A$318
• Life360 GDRs Rated New Outperform at RBC; PT A$8
• CSL Cut to Sector Perform at RBC; PT A$306
• Aurizon Raised to Overweight at JPMorgan; PT A$4

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