The Match Out: ASX twice gives up gains to finish -0.3%, Tech crunched following Snapchat comments, Technology One posts solid first-half result

James Gerrish

Market Matters

The ASX200 experienced another quiet session today with the financials trying hard but ultimately failing to deliver a positive day for investors. The influence of the banks on the index was very apparent, with more than 70% of stocks on the main board falling but the index closing less than 0.3% lower. Overall, we felt it was a solid performance considering US futures were down more than 1% when we closed courtesy of Joe Biden’s 5th Taiwan gaffe annoying both China and the White house plus Snap Inc’s (SNAP US), the social media company behind Snapchat, witnessing its stock plunge ~30% in after-market trade following another earnings downgrade from the company.

  • The ASX200 finished down -20-points / 0.3% at 7128 with only 24% of mainboard stocks closing up on the day.
  • The Financials +0.3% and Real Estate +0.4% Sectors were the only two groups to advance.
  • Whereas the weakest links were the Industrials -1.1%, IT -3%, Telcos -1.9% and Utilities -1.2%.
  • Snap Inc (SNAP US) saw a savage downgrade this morning AEST, which clearly weighed on the Australian growth stocks. But we felt it was encouraging to see Xero (ASX: XRO), Altium (ASX: ALU) and Megaport (ASX: MP1) all down less than 2.5%.
  • Tabcorp (ASX: TAH) split out its lotteries business today into The Lottery Corporation (ASX: TLC). Combined, the two entities put on 7.77% today.
  • Nufarm (ASX: NUF) -14.55%, suffered after major shareholder Sumitomo sold their 15.9% stake. Shares were crossed this morning at $5.38 which was a 7.9% discount to yesterday’s close, though above where shares finished today.
  • The iron ore stocks remained firm following the recent stimulatory news out of China
  • Lithium stocks led the resources today following comments from the world’s biggest producer Albemarle saying that realised prices were tracking higher as the contract prices closed the gap to spot markets. Allkem (ASX: AKE) +3.7% and Pilbara Minerals (PLS) +3.2% were the key winners here.
  • The $A slipped -0.4% as uncertainty re-entered the financial arena at least for a few hours.
  • Iron slipped -2.5% in Asia to around 849 CNY/MT.
  • Gold edged higher to around $US2/oz.
  • Asian stocks followed US futures lower with the Hang Seng -1.6%, China -1.5% and Japan’s Nikkei -0.9%.
  • US S&P500 Futures we trading down -1.2% as the ASX200 closed this afternoon, Nasdaq futures off over 2%.

ASX 200 chart

Technology One (TNE) $10.24

TNE -1.63%: first-half results were out for the HR & asset management SaaS business today with shares tracking lower despite a positive presentation. Annual Recurring Revenue (ARR) was up 44% on last year to $225 million and Profit Before Tax (PBT) was 14% higher to $42.5 million, both a small beat to expectations. Cashflow was weak, attributed to further R&D expenditure, though that is expected to normalise. The company reiterated long term guidance of $500 million ARR by FY26, and provided FY22 guidance that looks conservative given the first-half performance. Management expects PBT growth of 10-15% and ARR growth of 40% for the full year, a 6% improvement on prior guidance. Overall, a strong set of numbers though shares were lower with the tech sector under pressure.

Technology One

Broker moves

  • Dexus Industrial REIT Cut to Neutral at Macquarie; PT A$3.25
  • Integral Diagnostics Cut to Neutral at Macquarie; PT A$4.15
  • Mineral Resources Rated New Neutral at Barrenjoey; PT A$64
  • Allkem Rated New Overweight at Barrenjoey; PT A$15
  • Pilbara Minerals Rated New Underweight at Barrenjoey; PT A$3
  • Liontown Resources Rated New Overweight at Barrenjoey; PT A$1.80
  • Chrysos Corp. Rated New Overweight at Barrenjoey; PT A$8.30
  • Incitec Cut to Equal-Weight at Morgan Stanley; PT A$4.05
  • Wesfarmers Raised to Buy at UBS; PT A$56
  • Collins Foods Rated New Neutral at Barrenjoey; PT A$11
  • Allkem Rated New Outperform at Cowen; PT A$18

Major movers today

Have a great night,

The Market Matters team.

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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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