The Match Out: Market falls on lack of interest, US Inflation data tonight a key focus

James Gerrish

Market Matters

It was a softer session for the ASX today with weakness fairly broad-based although far from aggressive in nature. It simply felt like a lack of interest and if the traffic is anything to go by, many have already taken off for the school holidays / Easter break. Inflation data in the US tonight will be a key focus, with March CPI expected to be 8.4% year on year, up from 7.9% in February.

  • The ASX 200 finished down -31pts/ -0.42% at 7454.
  • The Materials sector was best on the ground but still fell (-0.04%) while Utilities (-0.04%) and Communications (-0.17%) were relative performers.
  • Healthcare (-1.40%) was the weakest link while IT (-0.90%) also fell away.
  • Aussie bond yields ticked higher but a more subdued session overall, upside momentum is starting to wane.
  • Gold stocks continue to catch our eye this week, today dominating the leader board as Spot Gold traded to US$1957. We think a test of recent highs is a strong possibility, around 10% higher.
  • Pendal (PDL) -0.19% rejected the first takeover bid from rival Perpetual (PPT) – 0.40%, however, we suspect there is more to play out here – today’s price action says we’re not alone in this view.
  • Lynas (LYC) -1.42% released 1Q22 production numbers today that were a tad soft.
  • G8 Education (GEM) -2.30% is still dealing with a confluence of factors ranging from floods to Omicron, which is creating headwinds for occupancy, management said at a 1Q22 trading update today. We’ll discuss this in more detail tomorrow morning – we hold this stock in the Income Portfolio.
  • Goldmans has become more positive on Oz Minerals (OZL) -1.13% upgrading to buy and $28.70 PT.
  • Goldmans also put out a positive note on Mineral Resources (MIN) –0.22% upgrading to buy and PT of $70.80.
  • Uniti Group (UWL) +2.56% up on speculation big super is now in the picture. The current best bid is from Morrison & Co at $5.00, stocks closed today at $4.80
  • BNPL stocks came under renewed pressure today after Block (SQ2) -0.41%, the old Afterpay, reported a big half-year loss while bad debts ballooned to $176.7 million, a similar sort of trend that we’ve seen across other industry players exposed in the US. Zip Co (Z1P) -5.71% and Sezzle (SZL) -5.24% down as a consequence. Zip closing today at $1.32 – Ouch!
  • Pilbara Minerals (PLS) -5.84% reported March quarterly production that was inline, shipments a touch light, FY guidance maintained.
  • Lynas (LYC) -1.42% delivered inline production numbers, the stock looks bearish here.
  • Lots of volatility in the Magellan Options (MFGO) that listed on Friday at 34c, it hit $2.24 yesterday and closed at $1.31 today. At today’s close, the benefit for MFG holders was around 16 cents per MFG share held. MFG shares are down -4.03% today at $15.95.
  • Hong Kong-based Tencent (700 HK) +5% rallied after Chinese regulators approved a batch of new games, the first such approvals in more than eight months.
  • Bitcoin (XBTUSD) was flat today however it’s back around US$40,000 after nearly hitting $US50,000 2 weeks ago.
  • Iron Ore was around 4% higher in Asia today.
  • Gold was up overnight and edged another +US$5 higher today.
  • Asian stocks were mixed Hong Kong up +1.02%, Japan -1.861% while China was up +1.36%
  • US Futures are all lower, down around -0.30%.

ASX 200 chart

Lynas Resources (LYC) $9.69

LYC -1.42%: the rare earth minerals business was out with quarterly production numbers today which were broadly positive, but failed to lift the share price. Production of NdPr was up 25% vs the December quarter with total REO production up 17%. Prices remain strong with increased demand for the critical minerals needed in most technologies and EVs. Progress is underway to build the Kalgoorlie processing facility as well with equipment now arriving for installation. All-in-all a solid update but there seems plenty of upside priced into Lynas at these levels.

Lynas

Pilbara Minerals (PLS)

PLS -5.84%: Reported March quarterly production of 81,431 dry metric tonnes (dmt) of spodumene concentrate, within its previous guidance of 75,000 to 90,000dmt. March quarter shipments totalled 58,383 dmt, which was soft but all a result of a delayed 20,000 dmt cargo that was scheduled for late March, and which left Port Hedland in early April. PLS maintained FY production guidance.

Pilbara Minerals

Broker moves

  • UBI AU Rated New Speculative Buy at Bell Potter; PT A$1.25
  • Nearmap Cut to Neutral at Macquarie; PT A$1.40
  • OZ Minerals Raised to Buy at Goldman; PT A$28.70
  • New Hope Cut to Sell at Goldman; PT A$3
  • Mineral Resources Raised to Buy at Goldman; PT A$70.80
  • Sandfire Raised to Neutral at Goldman; PT A$5.70
  • ANZ Bank Cut to Equal-Weight at Morgan Stanley; PT A$28.60

Major movers today

Have a great night,

The Market Matters team.

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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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