The Match Out: Market stalls, James Hardie (JHX) reports & rallies

The daily Match Out report for Tuesday 16 May with Market Matters' James Gerrish.
James Gerrish

Market Matters

A soft day for stocks with a barrage of economic data that implied the RBA may still raise rates again – which was enough to upset the apple cart. It was interesting to see the more defensive sectors feel most of the selling with 75% of the top 200 finishing under water, while the materials and energy stocks which are more heavily linked to Chinese growth were outperformers…
  • The ASX 200 finished down -32pts/ -0.45% at 7234
  • The Material sector was best on ground (+0.22%) and only sector in the green.
  • Staples (-1.23%), IT (-0.96%) & Healthcare (-0.96%) the weakest links.
  • The RBA minutes were released today from the May meeting where they lifted rates by 25bps to 3.85% - NAB thinks they’ll go one more by August, so does ANZ – CBA says they’ll sit on their hands in June but we should all be watching the data.
  • The move put the kibosh on consumer confidence which fell in May by 7.9% to 79 points. Bill Evans saying….a strict interpretation would attribute about 60% of the May fall to the federal budget and the remaining 40% to the rate decision and other factors.
  • China retail sales were up +18.4% YoY for April while Industrial output rose +5.6%.
  • James Hardie (ASX: JHX) +8.27% rallied after results met expectations for FY23 while 1Q24 guidance was above – at the midpoint they have guided to 1Q profit of $US155m v $US137m consensus – we’ll have more on JHX tomorrow morning - we hold in our Flagship Growth Portfolio.
  • Appen Ltd (ASX: APX) is raising $60m in fresh capital at $1.85, nearly a 20% discount to last – we lost money in Appen last year, cutting our position at $6.30 at the time – painful but less so now! A big turnaround needs to happen here under the CEO.
  • Lithium stocks one of the very few bright spots on the market today – Pilbara (ASX: PLS) remains our preferred play ending +1.27% higher at $4.79
  • The investment platforms caught our eye, HUB24 (ASX: HUB) -4.94% and NetWealth (ASX: NWL) -4.26% - these are ‘risk on’ stocks and money coming out of here is a sign the worm is turning in the short term.
  • Interesting to read that Michael Burry, who was made famous in The Big Short, is now adding to his bullish bets on e-commerce stocks (NYSE: JD) and Alibaba (NASDAQ: BABA) – we own the latter in our International Equities Portfolio.
  • Iron Ore was up ‘smalls’ in Asia
  • Gold was down -US$12, settled $US2004 at our close.
  • Asian stocks were mostly lower Hong Kong down -0.02%, Japan +0.57% while China was off -0.42%
  • US Futures are all down, around -0.30%  


Life360 (ASX: 360) $6.47

360 +11.74%: the digital safety company provided a strong 1Q update today as the company sits on the cusp of breakeven for the first time. Gross profit was up 40% with margins expanding 400bps as software subscription revenue grows as a proportion of sales. With operating leverage working its magic, the company posted an EBITDA loss for the quarter of just -$0.5m which compares to a FY EBITDA loss of $40m in FY22. From here, management expects to be operating cash flow positive in each quarter, grow subscription revenue by more than 50% and gave FY revenue guidance of $300-310m, in line with consensus. Shares hit a 5-month high today thanks to the strong update.

Life360 (ASX:360)

Broker Moves

  • Netwealth Rated New Underperform at Barclay Pearce Capital
  • Elders Raised to Market-Weight at Wilsons; PT A$7.04
  • Tyro Payments Cut to Underweight at Wilsons; PT A$1.33
  • Tyro Payments Raised to Outperform at Macquarie; PT A$1.80
  • Acusensus Rated New Buy at Canaccord; PT A$5.40
  • Elders Raised to Buy at CLSA; PT A$8.75
  • TPG Telecom Cut to Equal-Weight at Morgan Stanley; PT A$5.60
  • Rio Tinto Raised to Neutral at JPMorgan; PT A$107
  • Newcrest Cut to Neutral at Macquarie; PT A$30
  • Elders Cut to Neutral at Macquarie; PT A$7.77
  • Northern Star Cut to Accumulate at Ord Minnett; PT A$14.20

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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