The Match Out: Iron Ore drags ASX lower, tech rallies, EQT walks from Iress (IRE) bid

James Gerrish

Market Matters

The market struggled into the weekend with the heavyweights of the banks and resources stocks trading lower. Iron ore and coal names were hit hard by more aggressive rhetoric out of China as well as the threat of further cuts to steel production hampering the demand outlook. 

Banks followed the weakness while tech ran its own race to trade strongly higher.

  • The ASX 200 finished down -56pts/ -0.76% to 7403 – underperforming the region on concern that we’ve just poked the bear again (China)
  • For the week the ASX was largely flat, down just 0.04% Energy in the penthouse, Materials in the outhouse
  • BHP, Rio Tinto (RIO) & Fortescue (FMG) took 35pts off the index between them today – a big move across the board with FMG closing down 11.48% on a day that reeked of capitulation in the Iron Ore trade.
  • Coal also got hit with Whitehaven (WHC) down 10% early however buyers of the dip emerged there – it closed down 6.77% - importantly, WHC does not sell Coal to China.
  • Iress (IRE) -10.72% couldn’t keep pace with the tech sector after EQT walked away from takeover talks. Iress tried to soften the blow by reiterating profit guidance of $164-168m, as well as a target to double after tax profit by 2025, however the damage was done by the deal falling through.
  • Gold clawed back some ground in Asia after falling more than 2% overnight – ended the session at $US1764
  • Iron Ore Futures were down ~5%
  • Asian markets were stronger today, Nikkei +0.65% and the Hang Seng currently trading +0.36% for the day, China +0.92%
  • US Futures up around 10bps at our close – nothing significant

ASX 200

Sector Moves This Week - Source: Bloomberg

Stock Moves This Week - Source Bloomberg

Broker Moves 

  • Rio Tinto PT Cut to A$86 from A$102 at UBS
  • Fortescue Cut to Sell at UBS; PT A$15
  • New Hope Raised to Outperform at Macquarie; PT A$2.40
  • Temple & Webster Rated New Overweight at Barrenjoey; PT A$14.80
  • Oil Search Rated New Equal-Weight at Barrenjoey; PT A$4.67
  • Santos Rated New Overweight at Barrenjoey; PT A$7.44
  • Woodside Rated New Overweight at Barrenjoey; PT A$29.34

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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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