The Match Out: Stocks show fortitude in the face of fire, Energy remains the star

A solid underbelly from the market today to close marginally higher despite US stocks falling more than 1.5% overnight plus our influential banking sector ended the session lower. Energy again the standout with Oil up ~10% in Asia, which is huge while the broader Materials sector was also bullish. The composition of our index, being tilted towards resources helped the local market outperform the US by ~5% in February and continues to have a positive impact, this was a key call for MM this year.

• The ASX 200 finished up +20pts/ +0.28% at 7116
• The Energy sector was best on ground (+4.88%) while Materials (+3.00%) & Utilities (+0.84%) were also strong.
• Financials (-1.44%) and Real-Estate (-1.24%) the weakest links.
• Australian GDP out today was +3.4% QoQ & +4.2% YoY, which was more or less in line with expectations.
• The oil market is red hot and rallied almost 10% today as traders position ahead of inventory data that’s tipped to show US holdings down to the lowest level since 2014.
• Not surprising to see Energy stocks the standout on the market today with Santos (ASX: STO) and Woodside (ASX: WPL) up more than 6% a pop.
• We used strength in Santos to reduce our energy exposure into strength today on the premise that high prices will create the impetus for more dramatic action to curb prices.
• The US are very incentivised to cap prices if they can given inflationary pressures, plus Joe Biden’s approval rating looks like a chart of a BNPL stock!
• That said, we still have Oil exposure through BHP (ASX: BHP) which still has energy assets for now, plus of course our coal exposures on Whitehaven Coal (ASX: WHC) & Coronado (ASX: CRN).
• The peripheral areas also benefitting, Coal and example with Whitehaven +5.93% to retest the recent high ~$3.60 – we think there is more to play out here.
• Banks were weak on the market today overall tracking their overseas counterparts, Virgin Money (ASX: VUK) particularly so down -5.85% following European banks lower overnight.
• Magellan (ASX: MFG) -6.43% and Janus Henderson (ASX: JHG) -7.30% were hit today as the broader funds management space remained under pressure. We talked about our views on Pinnacle (ASX: PNI) this morning with the stocks down -0.87% today before trading ex-divi tomorrow.
• Iron Ore was ~4% higher in Asia today supporting Fortescue (ASX: FMG) +4.67% & Rio Tinto (ASX: RIO) +4.62%
• Gold was up overnight to ~US$1945 before tracking down -US$13 in Asian trade today, settled $US1932 at out close.
• Asian stocks were okay Hong Kong down -0.39%%, Japan +1.17% while China was up +0.21%
• US Futures are all up, around +0.40%

ASX 200

Weekly Video Update

In this week’s Market Matters Weekly Video Update, Portfolio Manager’s James Gerrish & Harrison Watt discuss portfolio performance for February across the suite of portfolios. The best return for the month coming from the Income Portfolio which appreciated by +3.91% holding ~70% Australian Equities along with Income Securities such as Hybrids & Bonds. The weakest being Emerging Companies down ~5% with the balance in between.

Click here to view

Sigma Healthcare (SIG) 49c

SIG -2%: surprisingly tough finish to the day for Sigma who substantially upgraded guidance for their FY22 result due out at the end of the month. The pharmaceutical wholesaler upgraded EBITDA guidance to 10-15% growth for the year against previous guidance of +10% as strong demand for COVID RATs helped turnaround performance into the January year end. Despite the big shift in guidance, the result will still be weighed on by further cost issues from the rollout of their ERP software designed to help pharmacies manage stock and workers. It does say a lot about the new system that it’s taken 4 weeks from the end of the financial year to notice a 20% swing in performance, and the upgrade is largely one-off given the nature of the demand for RATs.

Sigma Healthcare (SIG)

Broker Moves

• Cimic (ASX: CIM) Cut to Sell at Shaw and Partners; PT A$22
• Damstra Holdings (ASX: DTC) Raised to Market-Weight at Wilsons
• Avita Medical Inc (ASX: AVH) GDRs Cut to Underweight at Wilsons; PT A$2.50
• Allkem (ASX: AKE) Raised to Buy at UBS; PT A$12.40
• ALS (ASX: ALQ) Raised to Overweight at Jarden Securities; PT A$13.80
• Appen (ASX: APX) Cut to Hold at Canaccord; PT A$8
• Sezzle (ASX: SZL) GDRs Cut to Neutral at DA Davidson; PT A$2
• Cedar Woods (ASX: CWP) Raised to Add at Morgans Financial Limited
• Origin Energy (ASX: ORG) Raised to Neutral at JPMorgan; PT A$5.50
• InvoCare (ASX: IVC) Cut to Hold at Moelis & Company; PT A$13.23

Major Movers Today

Enjoy your night

The Market Matters Team