The Match Out: Market gives Budget thumbs up, What stocks will benefit from the cash splash?

James Gerrish

Market Matters

It was a positive session for the market today as we approach the end of the month and quarter – a period that’s been extremely volatile with a raft of reasons for the market to be down. But instead, the rally continues for a seventh straight session. Today it was IT stocks that led the line, bouncing nearly 4%, while Energy fell away on news of de-escalation between Russia and Ukraine. The news cycle has been dominated by the Federal Budget, which has been reasonably well-received, some specific stock beneficiaries are discussed in our Weekly Market Matters Video Update below.

  • The ASX 200 finished up +50pts/ +0.67% at 7514.
  • The IT sector was best on the ground (+3.84%) while Healthcare (+1.36%) & Industrials (+1.32%) were also strong.
  • Energy (-0.84%) and Materials (-0.29%) the weakest links.
  • The Federal Budget released overnight continued a recent trend of very large fiscal stimulus aimed at alleviating some of the cost of living pressures that have recently begun to weigh on consumer sentiment.
  • Cost of living tax offset benefits retailers exposed to low-income groups, stocks that would benefit here include Super Retail Group (SUL), City Chic (CCX), Adairs (ADH) and Collins Foods (CKF) which are all well-positioned to benefit from a less downbeat low-income consumer.
  • Fuel excise reductions are supportive of vehicle kilometres and automotive-related stocks such as Ampol (ALD), Bapcor (BAP), GUD Holdings (GUD), AMA Group (AMA), Eagers Automotive (APE), Autosports Group (ASG) and Viva Energy (VEA).
  • Infrastructure spending aims for industrial hubs in regional Australia and should benefit stocks such as Downer (DOW), Service Stream (SSM) and Seven Group Holdings (SVW).
  • Ultimately, it is earnings that matter most to equity markets, and this budget does not detract from the positive earnings momentum that we have seen from Aussie companies this year.
  • We discuss the stocks that could benefit from the budget in this week’s video update – Click Here.
  • Some big moves on the market today and with one day left in the quarter, it was nice to see strong outperformance across most of the MM Portfolios.
  • IT stocks front and centre here with big moves in Xero (XRO) +5.28% & Life 360 (360) +9.63% while at the smaller end of town Nitro (NTO) +12.77% and Whispir (WSP) +7.56% caught my eye.
  • Magellan (MFG) +8.53% was also strong for the second session in a row, some love going back into US tech certainly helping.
  • On the flip side, it seems the energy trade is now taking a break, Whitehaven Coal (WHC), a stock we like but recently sold fell-3.53% to $4.10, ditto for Coronado Resources (CRN) -4.57% while the Oils fell by less than 1%.
  • Telstra (TLS) -0.76% CEO Andy Penn is retiring, and chief financial officer Vicki Brady will succeed him in the top job from September 1.
  • The independent expert has given Blackstone’s bid for Crown (CWN) the green light, saying the offer was “fair and reasonable”, considering the “significant uncertainty” facing Crown and the possibility of Crown facing a multi-million dollar fine from Austrac for allegedly facilitating money laundering.
  • I had lunch today with Chamath De Silva from Betashares, previously from the RBA, talking about all things fixed income. He solidified some of our current thinking in the space and I look forward to sharing some of that with subscribers in later updates.
  • Iron Ore was around 1.7% higher in Asia today.
  • Gold was marginally higher today up +US$4 to ~US$1923.
  • Asian stocks were mostly higher with Hong Kong up +1.33%, Japan flat while China was up +1.62%
  • US Futures are flat.

ASX 200 chart

Weekly Video Update

In this week’s Market Matters Weekly Video update, James and Harry discuss stocks that should benefit from the Budget. Be sure to subscribe to the Market Matters YouTube Channel and ‘Like’ the video if you do – thanks!

Click here to view

Broker moves

  • Universal Biosensors GDRs Rated New Speculative Buy at Canaccord

  • Gold Road Cut to Hold at Bell Potter; PT A$1.70

  • Anglo American, BHP and Rio Tinto All Upgraded at Liberum (1)

  • Uniti Group Cut to Neutral at JPMorgan; PT A$5

  • Rio Tinto Raised to Hold at Liberum; PT 5,650 pence

Major movers today

Have a great night,

the Market Matters team.

Make informed investment decisions

At Market Matters, we write a straight-talking, concise, twice daily note about our experiences, the stocks we like, the stocks we don’t, the themes that you should be across and the risks as we see them. Click here for your free trial.

The Match Out will be available each day after the market close. Follow my profile to be notified when the latest report is live.

........
Livewire gives readers access to information and educational content provided by financial services professionals and companies ("Livewire Contributors"). Livewire does not operate under an Australian financial services licence and relies on the exemption available under section 911A(2)(eb) of the Corporations Act 2001 (Cth) in respect of any advice given. Any advice on this site is general in nature and does not take into consideration your objectives, financial situation or needs. Before making a decision please consider these and any relevant Product Disclosure Statement. Livewire has commercial relationships with some Livewire Contributors.

2 topics

James Gerrish
Portfolio Manager
Market Matters

James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...

I would like to

Only to be used for sending genuine email enquiries to the Contributor. Livewire Markets Pty Ltd reserves its right to take any legal or other appropriate action in relation to misuse of this service.

Personal Information Collection Statement
Your personal information will be passed to the Contributor and/or its authorised service provider to assist the Contributor to contact you about your investment enquiry. They are required not to use your information for any other purpose. Our privacy policy explains how we store personal information and how you may access, correct or complain about the handling of personal information.

Comments

Sign In or Join Free to comment