The Match Out: Commodities knock ASX lower, but it wasn’t all bad

James Gerrish

Market Matters

While the market was only 0.5% lower today, there were some large shifts from a sector perspective with higher value growth finally popping on the upside buoyed by a fall in bond yields, while recession fears knocked energy and commodities for six. 

Property & technology stocks were a standout, the pin-up of the tech sector being Xero (XRO) which rallied 6.65% while healthcare was also strong, CSL finally breaking out of its stubborn trading range and rallying 2.58%. 

Lots of doom and gloom today in the office for commodity focussed investors. However, it was actually a very strong relative day for MM. 

While our last ‘buy’ was Oz Minerals (OZL) is now down, we remain light on in the resources sector & have no positions in energy, looking to buy this washout style move on the downside.
  • The ASX 200 finished down -34pts/ -0.53% at 6594
  • The Property sector was best on ground (+3.14%) while Technology (+3.09%) & Healthcare (+1.97%) were also strong.
  • Energy (-5.81%) and Materials (-5.03%) were whacked today on rising concerns around a recession
  • BHP, RIO, Fortescue (FMG), Woodside (WDS) & Santos (STO) took 67 points off the index today – you don’t see that too often!
  • 113 stocks in ASX 200 actually finished higher today highlighting the narrow nature of the sell-off.
  • In line with overseas moves, local bond yields fell, and the Aussie 3-year yield was down 7bps to 2.87% - these were trading near 3.5% in June.
  • We’re seeing some of the fixed-rate bonds we’ve added to the income portfolio recently start to perform, the OZBD ETF +1% today amongst them.
  • There were some big moves in beaten-up tech names as a consequence of the bond move – Megaport (MP1) +14% topped the boards with some of the 9.5m shares held short starting to cover by the look.
  • Other tech stocks with large short interest include EML (9% short), KGN (8.5% short), ZIP (7.5% short), IEL (6.75% short).
  • I was on ausbiz this morning talking about the Tech sector and our preferred picks – Click here to watch
  • CBA, ANZ, NAB & MQG have all raised rates by 50bps – the banks traded up on the session today as they wait to pass it on to the savers!
  • Iron Ore was ~2% lower in Asia adding to pressure amongst the commodity stocks.
  • Gold was hit 2% overnight and was trading around ~US$1767 this afternoon, largely flat on the session today.
  • Asian stocks were down, Hong Kong off -2.4%, Japan -1.29% while China was knocked 1.93%
  • US Futures are all lower, down around -0.40% 

ASX 200

EML Payments (EML) $1.42

EML +10.51%: a strong day for the payment card company, initially catching a bid with the broader tech sector, but spurred on with a strong contract win. Tech was well bid today as investors added duration to portfolios with bond yields falling. 

Mid-morning, EML announced it had secured a deal with Spain’s postal service to supply 500k preloaded cards, each with €500, totalling around $320m worth of deposits. 

The offer is for younger Spaniards to spend on cultural activities in the latest round of stimulus, and builds on similar products offered in other European countries which EML also administered. It's a strong win for EML as it continues to build its footprint in the continent.

Broker Moves

  • Dacian Gold Raised to Neutral at Macquarie
  • Flight Centre Rated New Neutral at Barrenjoey; PT A$17.80
  • Corporate Travel Rated New Neutral at Barrenjoey; PT A$20
  • Webjet Rated New Overweight at Barrenjoey; PT A$6.30

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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