The Match Out: Subdued ASX ahead of tonight’s Budget, Worley (WOR) does well on Strategy

The daily Match Out report for Tuesday 9 May with Market Matters' James Gerrish.
James Gerrish

Market Matters

A reasonable session after a weaker open this morning saw the broader market grind higher throughout the day. Some interesting company news out, with Commonwealth Bank (ASX: CBA) providing a solid quarterly to round out bank reporting while Worley (ASX: WOR) held a strategy day where they outlaid the huge opportunity in front of them with the energy transition, and importantly, focussed on how they would grow margins.
  • The ASX 200 finished down -12pts/ -0.17% at 7264
  • The Financials sector was best on ground (+0.50%) while Industrials (+0.29%) also closed higher.
  • Property (-1.42%) and IT (-0.68%) the weakest links.
  • Australia is set to report the first Budget surplus in 15 Years tonight with Treasurer Jim Chalmers headlining at 7.30 pm.
  • CBA +0.23% started lower but closed higher following a decent 3Q trading update. Net Profit was up marginally vs the 1H average to $2.6b with a fall in Net Interest Income offset by higher non-interest income. They are on track to meet FY expectations, though noted NIM had fallen in line with commentary from the other banks. Capital is strong across the board, supporting better dividends later in the year if credit quality continues to defy the odds
  • Bank earnings estimates are being downgraded by analysts post recent results – margin pressure the main reason however capital levels/risk buffers remain incredibly strong. We are not getting bearish on the banks here.
  • Westpac (ASX: WBC) +0.14% underperformed today following downgrades by Citi & CLSA.
  • Worley (ASX: WOR) +2.87% held their strategy day today, and this story is a good one – all about margin expansion as we discussed this morning - Here - Shares closed today at new 4-year highs, breaking out on strong volume. The breakout systems will be triggered tonight!
  • HUB24 (ASX: HUB) +1.91% and Netwealth (ASX: NWL) +1.39% both had good sessions– the platform stocks have been in a holding pattern for the past few months, however, both are starting to attract more interest.
  • We’re focussing on the Fund Managers tomorrow in the Market Matters Portfolio Positioning report, including Perpetual (ASX: PPT), Magellan (ASX: MFG), Regal Partners (ASX: RPL) & Pershing Square for our International Equities Portfolio.  
  • We were discussing travel stocks on the desk today i.e. is it too late? The one we keep circling back to is Corporate Travel (ASX: CTD) -0.91%, Citi raised it to a BUY today and $23.80 PT.
  • China’s coal imports fell in April from a 15-month high in the prior month as weak power demand, high inventories and sliding domestic prices curbed overseas purchases.
  • China also has a significant influence on the Lithium market which is the topic we covered this morning, asking the question, How is MM playing it?
  • Iron Ore was ~2% higher in Asia while Coal prices have remained under pressure – the active contract sitting at US$168.50/t
  • Gold was higher, settling $US2027 at our close.
  • Asian stocks were mixed Hong Kong off -1.7%, Japan +1.1% while China fell -0.67%
  • US Futures are all down, around -0.10%  


Broker Moves

  • Corporate Travel Raised to Buy at Citi; PT A$23.80
  • Flight Centre Raised to Buy at Citi; PT A$25.50
  • Westpac Cut to Neutral at Citi; PT A$22.50
  • Westpac Cut to Reduce at CLSA; PT A$22.20
  • Wesfarmers Reinstated Equal-Weight at Morgan Stanley; PT A$47.50
  • Deterra Rated New Neutral at JPMorgan; PT A$4.40
  • Growthpoint Rated New Buy at Citi; PT A$3.60
  • Lynas Cut to Neutral at Citi; PT A$8.15
  • Leo Lithium Ltd Rated New Overweight at Wilsons; PT A$1.55
  • Liontown Resources Rated New Market-Weight at Wilsons; PT A$2.90
  • Core Lithium Rated New Market-Weight at Wilsons
  • Pioneer Rated New Overweight at Wilsons; PT 55 Australian cents

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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