The Match Out: Early optimism fades, Zip and Sezzle no longer shacking up, Good update from Eagers

A mixed bag today with defensives holding up while anything growth-related fell away – low volume again for the ASX keying off a similar theme in the US (slowest session of the year overnight) ahead of inflation data tonight + earnings season kicking into gear.

• The S&P/ASX 200 added +4 points / +0.06% to close at 6606 - it was up strongly early on but tapered off in line with US Futures.
• Utilities (+1.24%), Consumer Staples (+1.20%) and Healthcare (+1.11%) standouts on the upside
• Materials (-1.16%) and Telco’s (-0.75%) the weakest links.
• CSL & Resmed (RMD) caught my eye today, CSL now fast approaching our ~$300 target – an easy place to hide.
• Lake Resources (LKE) was in a trading halt following the short report released by J Cap after close yesterday – we covered this in the Market Matters Report this morning – Click Here
• The other Lithium stocks were lower, Allkem (AKE) -4.8% the weakest while our preferred exposure IGO was -0.31% and Pilbara (PLS) -2.18%, both down but not by a lot.
• eCommerce stocks were hit today, consumer confidence ticked lower again according to an ANZ/Roy Morgan survey however after a sharp rally in recent days, the likes of Kogan (KGN) -9.67%, Temple & Webster (TPW) -16.57% and our nemesis Adore Beauty (ABY) -8.88% all fell away sharply.
• Eagers (APE) +3.31% rallied on a solid update today - it’s been a tough 12 months for APE down ~30%
• Zip Co (Z1P) +6% & Sezzle (SZL) -38.55% had divergent performances after terminating their proposed merger agreed in February. This is unlikely to help sector sentiment in the short term.
• Overnight Klarna has also confirmed the terms of a major funding round with the valuation down ~80% from May 2022 peak valuation.
• A rise in covid cases is knocking the travel-related stocks again – Qantas (QAN) -3.42% hit hardest.
• US Inflation data out tonight, a hotly watched release with consensus being for +8.8% YoY
• Iron ore futures were down another 2% today in Asia - now trading US$107/tonne in Singapore
• Gold was down US$3 at US$1730/oz at our close.
• Asian markets were down, the Nikkei in Japan -1.38%, Hong Kong stocks fell -1.22% while China was off -0.66%
• US Futures are trading lower and have drifted that way throughout our session – all down ~0.50%

ASX 200 Chart

Eagers Automotive (APE) $10.91

APE +3.31%: the Australian & NZ auto dealership company saw shares trade higher today after a strong first-half update. Underlying pre-tax profit is expected to come in around $195m, around 5% above guidance provided in May of $183-189m. The car market has been struggling to get its hands on supply, so Eagers now has a record new car order book while cost-out programs are further supporting earnings. They completed the sale of Bill Buckle Auto as expected on 30 June, adding another $83m to their pile of cash which now stands at $326m. This balance sheet strength supports plans to buy back 10% of shares on issue over the next 12 months.

Broker Moves

• Beacon Lighting Rated New Positive at Evans & Partners Pty Ltd
• Link Administration Cut to Hold at Morgans Financial Limited

Major Movers Today

Enjoy your night,

The Market Matters Team

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