The Match Out: Market hit as Materials weigh, Megaport (MP1) down another ~10%

James Gerrish

Market Matters

A tough session to end a softer week for the market with 80% of the ASX 200 finishing lower. We penned a note on Thursday titled: What are MM’s favourite defensive stocks here. Looking at the weekly performances of ASX sectors it was a timely missive with Healthcare, Industrials, Utilities and Staples the relative performers for the period while Materials & IT lost over 5% a pop. On the market today it was the Material stocks that felt the brunt with BHP down -4.36% taking 33 points off the index alone, a huge influence.

  • The ASX 200 finished down -119pts/ -1.57% at 7473
  • For the week, the index fell a more modest 0.67%.
  • The Healthcare sector was best on ground (+0.54%) while Staples (flat) & Communications (-0.08%) were relative performers.
  • Materials (-3.28%) and IT(-2.52%) the weakest links.
  • Always good to look across portfolios on a day where the market is down ~100pts to identify the defensive positions held.
  • In the Flagship Growth Portfolio, CSL, CSR and Goodman Group (GMG) along with recent addition TPG Telecom (TPM) were higher highlighting their defensive qualities.
  • In the Income Portfolio Telstra (TLS), Transurban (TCL), Smart Group (SIQ) & G8 Education (GEM) finished green (along with a bunch of Hybrids).
  • Megaport (MP1) -9.69% hit hard for the second session losing 30% of its value since reporting weaker growth numbers.
  • Uranium sold off overnight, the Sprott Physical Uranium Trust fell ~7% and the ETF URA fell 8.39%
  • Paladin (PDN) knocked 8.33% today and will be one to buy again if it pulls back into the 70’s.
  • Oz Minerals (OZL) -6.33% released 1st quarter production numbers that were weak, though they maintained FY guidance. Copper production was down 5% on the December period to 30kt, and will need to be 40% higher in each of the next 3 quarters to hit the midpoint of their 127-149kt guidance. Costs were also well up on weather impacts and labour issues mainly around COVID absenteeism.
  • Mineral Resources (MIN) -2.18% had a busy quarter with a number of agreements signed and plenty of iron ore and lithium shipped. The key moving forward remains the lithium business, pricing was slightly disappointing compared to peers though still up ~60% in the quarter. They reconfirmed guidance for the full year, just a quarter to go.
  • Iron Ore fell ~2% in Asia today.
  • Gold was flat at~US$1952.
  • Asian stocks were mostly lower Hong Kong off -0.37%, Japan down -1.5% while China was up +0.28%
  • US Futures are flat.
  • A long weekend in Oz with no trade on Monday.   

ASX200

Sectors this week 

Source: Bloomberg

Stocks this week

Source: Bloomberg

Broker Moves

  • Zip Co. Cut to Hold at Morgans Financial Limited; PT A$1.26
  • Megaport Cut to Hold at Canaccord; PT A$11
  • Bega Cheese Cut to Sell at Goldman; PT A$5.15
  • Endeavour Group Cut to Underperform at Credit Suisse; PT A$6.60
  • Brambles Cut to Underperform at Jefferies; PT A$8.85

Major Movers

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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