The Match Out: Market grinds higher, Tech leads while talk of further bank buy-backs support the financials

James Gerrish

Market Matters

The ASX marched higher today supported by another strong rally in the technology stocks while talk of further buy-backs amongst the banks saw the sector well bid. Overall, the market is net bearish given the confluence of negative headlines and a bunch of traders we talk with are scratching their heads trying to reconcile the moves, however the simple explanation is when the marginal seller has already sold and are positioning for the pullback, stocks often move in the other direction – it’s all about positioning for now.

  • The ASX 200 finished up +36pts/ +0.50% at 7377
  • The IT sector was best on ground (+3.47%) while Financials (+0.99%) & Utilities (+0.86%) were also strong.
  • Materials (-0.39%) the only sector to finish in the red today
  • Ash Barty announced her retirement from professional tennis, the 25-year-old world number 1 said she is physically spent and wants to chase other dreams. The bride will be very upset about this!
  • I was on Ausbiz this morning talking about Fisher & Paykel Healthcare (FPH) and our view on technology stocks – Click here to watch
  • Fisher & Paykel (FPH) -7.88? fell today on a guidance downgrade, revenue tipped to be more than 4% below consensus for this year leading to around a 9% drag on earnings.
  • Calix (CXL) +15.66% was strong after announcing the Financial Investment Decision (FID) for their LEILAC-2 project.
  • Imugene (IMU) +9.62% rallied after receiving ethics approval to commence US clinical trials.
  • Uniti Wireless (UWL) +10.66% has received another bid, this time it seems Macquarie & PSP Investments are offering $5 a share versus the $4.50 existing bid from Morrison’s.
  • Austal (ASB) -11.25% announced that they were overlooked for a key Offshore Patrol boat contract with the Philippines Navy despite years of negotiations.
  • Morgan Stanley has forecast $3 billion worth of buyback extensions, or $1 billion from ANZ Banking Group and $2 billion from National Australia Bank, when they report interim results in May.
  • Iron Ore was ~0.7% higher in Asia today.
  • Gold was flat ~US$1932
  • Asian stocks were strong today, Hong Kong up +1.30%, Japan rallied nearly+3% while China was up +0.44%
  • US Futures are marginally higher  

ASX200 Chart

Calix (CXL) $8.05

CXL +15.66%: their LEILAC-2 project has now achieved Financial Investment Decision (FID) and will now progress to the build. The move will see Calix’s technology capture 20% of the HeidelbergCement plant’s CO2 emissions in Hannover. The technology helps reduce carbon emissions in one of the biggest emitting industries globally, and just one string on the bow of Calix’s offering.

Austal (ASB) $1.775

ASB -11.25%: announced that they were overlooked for a key Offshore Patrol boat contract with the Philippines Navy despite years of negotiations. There was no value assigned to the potential contract however there was a Memorandum of Understanding in place and Austal would have been confident of securing the deal. Instead they’ll now look to fill the void with orders of commercial ferries to be built at the shipyard in the Philippines.

Broker Moves

  • Cooper Energy Rated New Underperform at Barclay Pearce Capital
  • OFX Reinstated Overweight at Wilsons; PT A$3.14
  • Sonic Healthcare Raised to Outperform at Credit Suisse; PT A$40

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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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