The Match Out: Stocks down, Energy gives up recent gains as Supermarkets rally

James Gerrish

Market Matters

Some cracks started to appear in the ASX today with the recently hot Energy & Materials sectors coming under pressure while the traditionally defensive Healthcare & Staples saw buying of recent weakness. All the talk has been about commodities in recent days/weeks and today some profit-taking became obvious, which shouldn’t come as a huge surprise really given the recent run.

  • The S&P/ASX 200 fell -58points / -0.83% to close at 6980.
  • Healthcare (+1.85%) & Consumer Staples (+1.69%) led the line while the Energy (-3.57%) and Materials (-3.28%) were the drags – interestingly, IT was not a top 3 gainer or loser implying a calmer session / potential pivot point.
  • Copper was down `3.5% today dragging down the copper stocks.
  • Not a lot out of company-specific news out today, more rain than anything in Sydney as parts of the Northern Beaches go under.
  • Paladin (PDN) -4.76% down on director selling, more on that below
  • Calix (CXL) -2.08% on a small incremental +ve update
  • Interesting to see the Healthcare stocks find some love today – CSL +2.8%, Resmed (RMD) +1.94%
  • Iron ore futures in Singapore held around $165 a ton although the Iron Ore stocks traded lower, BHP -3.67%, RIO -4.34% & FMG -4.5%.
  • Smart Group (SIQ) -7.88% however they went ex a big 49c dividend.
  • Gold was still around US$1990 at our close.
  • Asian markets mixed, Japan off -1.42%, Hong Kong up +0.07% & China off -0.50%.
  • US Futures are lower, S&P down -0.66%

ASX 200 Chart

Paladin (PDN) 70c

PDN -4.76%: News out yesterday that the Chairman + 1 Non-Exec Director sold decent lines of PDN shares the day before the Nuclear power plant was attacked in Ukraine was getting some airtime in the press today and the stock fell as a consequence. Clearly some interesting timing, more a fluke we would suggest however it does show the view from the inside when the stock gets over 80c. This time around they sold 4.5m shares while they also offloaded stock in December above 80c as well. As subscribers know, we sold out of PDN recently, more a call on risk than anything, however, we do remain medium-term bullish on the sector. Our view is that the Uranium stocks are leveraged plays on the Uranium price, they get extended when momentum / optimism towards the sector is strong and will undershoot when the momentum fades. The short-term in MM’s view now looks more clouded from a sentiment perspective following the incident in Ukraine even though it was a non-event. PDN at 70-80c is pricing in Uranium north of where they are today (~US$50/pound), hence we sold the stock for now, but have held the Sprott Physical Uranium Trust in our ETF portfolio which is more closely aligned with the Uranium price and less full of the speculative euphoria.

Paladin (PDN)

Calix (CXL) $6.12

CXL -2.08%: a small win for the environmental tech company with Calix receiving regulatory approval in Australia for its BOOSTER-Mag product. The insecticide product suppresses a highly destructive mite with trials showing it can vastly reduce the need for other insecticide products on crops. It’s a small win but further validates just one application of Calix’s calcination technology

Calix (CXL)

Broker Moves

  • Paradigm Biopharma Cut to Reduce at Morgans Financial Limited
  • Atturra Rated New Buy at Shaw and Partners
  • Gold Road Rated New Buy at UBS; PT A$1.94
  • Hansen Tech Raised to Outperform at RBC; PT A$6
  • Sonic Healthcare Raised to Overweight at JPMorgan; PT A$37.30
  • Incitec Raised to Outperform at Credit Suisse; PT A$3.85

Major Movers Today

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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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