The Match Out: Stocks rally as the market prices in peak interest rates, Property stocks lead

The bulls were on the front foot today as the prospect of peak rates permeated through the market, interest rate-sensitive sectors saw the most love led by the depressed property sector.

• The ASX 200 finished up +53pts/ +0.73% at 7455
• The Property sector was best on ground (+3.33%) while IT (+2.19%) & Consumer Discretionary (+2.08%) were also strong.
• Materials (-1.04%) and Energy (-0.53%) the weakest links.
• Futures now pricing only an 11% chance of an interest rate hike when the RBA meet on Tuesday.
• Coal stocks fell on news that the NSW Govt is looking to re-cut the royalty regime.
• Macquarie (ASX: MQG) -4.37% lost ground after a soft quarterly update, things are quiet in investment banking while trading volumes were soft.
• Sandfire (ASX: SFR) +9% was a standout on a good quarterly where they talked up their prospects at Motheo while they discussed options at DeGrussa.
• Perpetual (ASX: PPT) -1.52% fell on further outflows to the tune of $5.1bn, mainly in global and international equities, during the September quarter.
• Fortescue (ASX: FMG) -3.41% fell despite iron ore shipments at the top end of guidance, but costs are on the up – we’ve seen a lot of this.
• Regal Partners (ASX: RPL) +1.18% launched a $555m bid for Pacific Current Group (ASX: PAC) overnight, while GQG has joined the fray today – we’ll nut this out further tomorrow morning.
• Megaport (ASX: MP1) +14.44% stormed higher on a relatively strong quarterly, saying they were cash flow positive (+$33m in the bank).
• Iron Ore was ~1.4% lower in Asia weighing on the miners today.
• Gold was higher in Asia, settling ~US$1974 at our close.
• Asian stocks were mixed, Hong Kong up +0.96%, Japan +0.98% while China was down -0.32%
• US Futures are marginally higher, the Nasdaq the best of them thanks to Meta’s results.

ASX 200 Intraday 

ASX 200 Daily

Macquarie (MQG) $175.03

MQG -4.37%: the investment bank hosted its AGM today which came with a soft 1Q update weighing on shares. The company said both market-facing and annuity-style sides of the business had difficult starts to the year with profit substantially down. The group relies on activity to generate earnings and lower capital market deal flow & reduced commodity volatility weighing on the market sides of the business. 

The annuity side has seen higher earnings from the banking arm thanks to growth in the loan book, however, this has been more than offset by lower asset management returns, particularly in green investment. 

Consensus had priced in a 7% drop in earnings for the first half, though the commentary suggests the company is tracking well below that. The company has consistently under promised and over delivered, so we have confidence in a swift turnaround for earnings here – although clearly some external factors are having an influence.

Coal Stocks

The sector was hit today with Whitehaven (WHC) -5.85%, New Hope (NHC) -5.65% & Bowen Coking Coal (BCB) -10.34% all suffering large declines. 

Media reports this morning surfaced that the NSW government is looking to revamp coal royalties ahead of the state budget in September, and we doubt that it will end in coal companies paying less! 

The Government has asked the industry for input as part of a broader consultation with coal miners, power generators and trading partners on what steps should be taken when the state’s temporary coal price cap expires.

While we don’t know where this will land, it’s unlikely to be favourable.

Broker Moves

• Rio Tinto Cut to Reduce at CLSA; PT A$124
• Mineral Resources Raised to Accumulate at CLSA; PT A$82
• ALS Raised to Neutral at Jarden Securities; PT A$11.50
• Iluka Cut to Sell at Canaccord; PT A$10.50
• Medibank Private Raised to Overweight at JPMorgan; PT A$3.80
• Nib Cut to Neutral at JPMorgan; PT A$8
• Austal Cut to Neutral at JPMorgan; PT A$2.35
• Beach Energy Cut to Neutral at Citi; PT A$1.65
• Beach Energy Raised to Positive at Evans & Partners Pty Ltd
• Tyro Payments Raised to Hold at Jefferies; PT A$1.40

Major Movers Today

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.