The Match Out: Early optimism fades, ASX slides into the close

• The ASX 200 finished down -3pts/ -0.05% at 7256
• The Financials sector was best on ground (+0.77%) while Property (+0.57%) & Energy (+0.35%) were also strong.
• Consumer Discretionary (-1.04%), Staples (-0.83%) & Materials (-0.74%) the weakest links.
• Headlines this morning flashed that Biden and McCarthy agreed default is off the table – which saw US Futures supported before our open however the optimism was lethargic at best – and waned throughout the session.
• Retailers are looking weak here, particularly the ones that have been outperformers (Super Retail (ASX: SUL) & Wesfarmers (ASX: WES)) for example – we own the latter in the Income Portfolio and have trimmed it recently – but the sector is finally showing some vulnerability.
• Ramsay Healthcare (ASX: RHC) -1.55% has been a poor pick, and we’ve pretty much bought the recent high and gone downhill ever since. Our position in the Flagship Growth Portfolio now showing a loss of -14%. Today they pulled a bond deal due to lack of interest. They had planned to sell 5-year paper but after pounding the pavement for 2 weeks, they didn’t proceed, presumably the sticking point was around pricing. We’ll cover our updated thoughts on RHC tomorrow morning, and our plans for the position.
• Staying on Healthcare, UBS updated their views on the sector overnight - ResMed (ASX: RMD) +0.21% is a top pick saying, we think ResMed is priced for high-single-digit near-term top-line growth, but we see 12% as the market still underestimates the degree to which the company can capitalise on the absence of the other major player in sleep devices. MM owns RMD.
• WiseTech (ASX: WTC) -0.07% hit a record high of $74.46 intra-day is now up 7x since the Covid induced low, which is phenomenal – perhaps worth revisiting that short thesis!
• OFX +20.13% rallied hard on a slightly better FY23 result today with margins now heading in the right direction, they launched a buyback and FY24 EBITDA (underlying) guidance was ~8% above current consensus. It’s coming off a low base and most metrics turned up – this could continue to rally.
• Another one we’re looking at again (that has been hammered in recent years) is Catapult (ASX: CAT) +8.16%, which provides wearable sports technologies, FY23 results out today shows a progressive turnaround.
• Silk Laser (ASX: SLA) +12.3% up as EC Healthcare came from left field with an all-cash offer for SLA at $3.35, trumping Wesfarmers (ASX: WES) $3.15 bid.
• Qantas (ASX: QAN) -2.15% fell despite saying pre-tax profit will be $2.5 billion – about inline with current consensus.
• National Australia Bank (ASX: NAB) +0.38% is raising prices for new borrowers and removing cash back – a sign the banks are becoming more ‘rational’ following recent updates that flagged margin pressure. Good for shareholders, not so for consumers.
• Uranium stocks are moving – Paladin (ASX: PDN) +5.3% caught our eye today and looks good – we’re bullish the Uranium sector.
• Zip Co (ASX: Z1P) +12.73% + Block (ASX: SQ2) +4.49% rallied on the realisation that more regulation was a positive for the incumbent BNPL stocks.
• Sonic Healthcare (ASX: SHL) -2.98% fell on a UBS SELL call while Tabcorp (ASX: TAH) +3.20% enjoyed a Morgan Stanley upgrade
• Iron Ore was ~2% lower in Asia today, Coal prices edged higher.
• Gold was down -US$9 in Asian trade today, settled $US1962 at our close.
• Asian stocks turned lower, Hong Kong down -0.76%, Japan -0.58% while China was off -0.97%
• US Futures are largely down.   

ASX200

Catapult Group (ASX: CAT) $0.795

CAT +8.16%: the sports tech company released their FY results last night, showing a strong turnaround from its disappointing HY result 6 months ago. The company, which develops tracking and analytic solutions for professional sports teams, saw its Annualized Contract Value (AC) grow slightly above its 20% target while the market enjoyed the focus on costs with benefits from the restructuring announced at the HY result being realized faster than originally thought.

Catapult Group (ASX: CAT)

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The Market Matters Team

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