The Match Out: ASX up, Dominoes (DMP) down on weak trading update, Register for the Resources Webinar

A positive session to kick off the shortened week which will be dominated by key US economic data. CPI Inflation tonight in the US is expected to be benign, up just 0.1% MoM and 4.1% YoY, down from 4.9%. This should mean the Federal Reserve holds rates at 5-5.25% on Thursday, although the market has largely priced in another 0.25% increase in July.

Webinar this Thursday: James Gerrish will be joined by Head of Research Andrew Hines from Shaw & Portfolio Manager Ben Cleary from Tribecca, discussing, Is now the time to load up on Resources?: Click Here to register

In what is set to be a tectonic global shift — we'll outline the outlook for the resources sector and the stocks to buy now.

• The ASX 200 finished up +16pts/ +0.23% at 7138
• The IT sector was best on ground (+3.76%) while Communications (+1.05%) & Healthcare (+0.98%) were also strong.
• Energy (-1.32%) and Materials (-0.77%%) the weakest links.
• Interesting to see Japanese shares hit their highest level since 1990, the Nikkei 225 was up 1.6% today and is up ~27% YTD.
• Chinese Equities also gained today on reports that China is considering a broad package of stimulus measures.
• NAB +0.08% revised their forecast on the peak cash rate to 4.6%, while they lowered expectations on GDP growth.. They think the RBA will act in July & August and that will weigh heavily on growth.
• Domino's (ASX: DMP) -5.86% fell on a weak update – more on this below, this is simply an avoid in MM’s view.
• Appen (ASX: APX) -3.38% fell after announcing management changes.
• Uranium stocks rallied led by Paladin Energy (PDN) +9.35% - we’re bullish on the sector as discussed in a recent report Here
• Wesfarmers (ASX: WES) +0.92% plans to buy InstantScripts for $135m, as reported in the AFR
• French defence giant Thales has made a 13¢-a-share bid for Tesserent (ASX: TNT), a 165% premium to last of 4.6¢ but a long way its 12-month high of 44c. TNT is in Cyber security. The board has unanimously recommended the deal however it is subject to approval from the Foreign Investment Review Board. The offer values Tesserent at $176 million.
• Glencore (GLEN) which we own in our International Equities Portfolio has proposed buying Teck Resources’s coal business – we’ll cover this in more detail in tomorrow’s Portfolio Report.
• Iron Ore was flat in Asia today supporting Fortescue (ASX: FMG) mirrored the move while RIO fell -1.48% after losing a key executive to IGO
• Gold was up US$5 in Asian trade, settled $US1963 at our close.
• Asian stocks were solid Hong Kong up +0.70%, Japan +1.88% while China was up +0.50%
• US Futures are all up, around +0.30%

ASX 200 Chart

Domino’s Pizza (ASX: DMP) $43.55

DMP -5.86%: the pizza franchisor fell to a 3-year low today after announcing it was looking to close several underperforming stores combined with a poor trading update. They’ll start by wrapping up the 27 stores in Denmark, a small group they bought out of receivership in 2019 which has failed to improve materially since acquisition. The company also plans to close a further ~70 corporate stores and bring on franchise partners for another ~70 corporate stores. These changes plus a handful of other streamlining operations are expected to add $53-59m in EBIT annually while costing $80-93m over FY23 & 24. Sales have been lacklustre this year, running at +0.2% in the second half, well below the 3-6% target, while costs have also been squeezing margins. We see no reason to catch the falling knife into new lows.

Broker Moves

• Reject Shop Cut to Hold at Morgans Financial Limited; PT A$4.25
• JB Hi-Fi Cut to Hold at Morgans Financial Limited; PT A$45
• Aussie Broadband Rated New Market-Weight at Wilsons; PT A$2.91
• Hansen Tech Rated New Overweight at Barrenjoey; PT A$6.50
• PWR Holdings Raised to Buy at Bell Potter; PT A$10.50
• Domino's Pizza Enterprises Cut to Sell at Citi; PT A$42.80
• Bapcor Cut to Neutral at Citi; PT A$6.49

Major Movers Today

Have a great night

The Market Matters Team

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