The Match Out: ASX ticks higher, growth sectors outperform, Incitec Pivot (IPL) rallies with FY21 result

James Gerrish

Market Matters

A reasonably muted start to the week for equities which tracked higher through the morning before giving around a quarter of the gains throughout the afternoon. Buyers tried to see the index close through the key 7480 level we discussed in the morning report with buying on the close getting to within touching distance, just 10pts away. 

Still, a better than expected start to the week with futures initial pointing to a flat session.

  • The ASX 200 finished up +27pts/+0.36% today at 7470
  • NAB went ex-dividend today for 67c which dampened the performance of the financial sector. The recent outperformer in CBA also closed lower while the remaining 2 big banks finished in the black.
  • Energy was the weakest sector despite Woodside (WPL) finding support in the market after bringing in an investor for construction around their Pluto asset.
  • Growth focussed sectors of Healthcare and Tech stood out today as the bond sell off took a breather.
  • Chinese data beat expectations – Retail sales up 4.9% YoY in October vs 3.6% expected and Industrial Production up 3.5% YoY vs +3% expected, but equities didn’t seem overly phased
  • Explosives and fertilizer business Incitec Pivot (IPL) reported full year numbers which saw the stock surge 17% early in the day. More on that below
  • Elders (ELD) flagged supply chain struggles but still posted a strong profit of $151m, up 40% in their FY21 result today. They are confident in growing earnings again in FY22 however
  • Bio-pharma company Mesoblast (MSB) won best on ground today in the top 200. They presented new data around their cell therapy aiming to prevent chronic heart failure with test showing an 80% drop in cardiac related deaths.
  • Gold was down marginally in Asia, -$US7 to trade $US1857 at our close
  • January Iron Ore Futures fell around 2% today in Asia
  • Asian markets were mixed, Nikkei +0.54%, Hong Kong flat while China was down -0.44% at the time of writing
  • US Futures are flat to marginally higher, Nasdaq futures the standout, up 20bps

Chart: ASX 200

Incitec Pivot (IPL)

IPL +3.85%: Shares in the fertilizer & explosives business shot out of the range today, trading to 24 month highs early before giving up most of the gains. The FY21 result was out this morning which saw adjusted EBIT rise 51% to $566m with market leading explosives tech and surging fertilizer prices contributing to a strong 2nd half and a beat at the result. They flagged strong commodity prices with spot ammonia currently more than double last year’s average price. They managed to post the strong growth in earnings despite continued production issues, Incitec are confident these issues are behind them and the WALA plant should run to nameplate capacity this year.

Chart: Incitec Pivot (IPL)

Broker Moves

  • Orica Cut to Neutral at Citi; PT A$15
  • Xero Raised to Overweight at Wilsons; PT A$156.82
  • Wiluna Mining Corp Ltd Rated New Buy at Peel Hunt; PT A$1.45

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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