The Match Out: US Debt deal boosts market, Discretionary left behind

The local market was on the front foot early, jumping almost exactly +100pts/+1.4% on the open today following a tentative deal on the US debt ceiling. The ASX followed a positive move from the US on Friday night with US Futures adding to gains during trade this morning, however, the rally was sold into with the S&P500 Futures currently trading ~0.5% from the session highs. Tech in particular finished well of intraday highs after some profit-taking kicked in – the sector is up nearly 12% this month, by far the best-performing sector in a market that has fallen more than 1% in the same period. Real Estate saw the best of the gains as it swung into positive territory for May, supported by strength in Financials and Materials.

• The ASX 200 finished up +62pts/ +0.87% at 7217
• The Real Estate sector was best on ground (+1.89%) while Financials (+1.22%) & Materials (+1.10%) were the only other sectors that added more than 1%
• Consumer Discretionary (-0.59%) and Tech (-0.36%) were the only sectors lower today. Telcos (+0.03%) managed a small gain, though meaningfully underperformed the market.
• English Language testing company Idp Education (IEL) -15.92% fell after Canada moved to allow competitors into the Student Visa market. More on that below
• ALS (ASX: ALQ)-4.16% reported a strong headline FY23 result 2% ahead of consensus, however their recent acquisition in the Life Sciences space, Nuvisan, underperformed and weighed on margins.
• Select Harvests (ASX: SHV) +8.72% rallied despite a poor 1H report which saw an NPAT loss of $103m. The market liked the talk around improving fertilizer prices and the commentary about diversifying the business.
• Leo Lithium (ASX: LLL) +17.24% raised $106m through a placement with China lithium giant Ganfeng to fund an expansion of production and further exploration. The raise was done at an 11.7% premium to Friday’s close.
• Iron Ore was up +3.5% in Asia today with BHP +1.43% the best of the three iron ore stocks, though all finished well off highs.
• Gold was largely flat in Asian trade, hanging around $US1948/oz, gold stocks were mixed today.
• Asian stocks are mixed, Nikkei +1.03%, China +0.3% but Hang Seng currently -0.72%
• US Futures are up today. The US market is closed tonight for the Memorial Day holiday.

ASX 200 Chart

Idp Education (ASX: IEL) $21.71

IEL -15.92%: an announcement out of Canada over the weekend saw a wave of selling in Idp today. The English language testing company has help a monopoly over the Student-Direct-Stream (SDS) visas with the company now allowing competitors to offer testing services. IEL will still be the main offering, but with added competition in the space, it is likely to see some market share lost, particularly from FY24 and beyond once competitors get their service up to standard. When the UK allowed other providers into the market, IEL lost around 10% of the market share in a reasonably short time frame while in FY22, Canada made up more than a quarter of enrolments for the company.

Broker Moves

• Appen Raised to Market-Weight at Wilsons; PT A$2.54
• F&P Healthcare Cut to Neutral at Jarden Securities; PT NZ$24.50
• Appen Raised to Sector Perform at RBC; PT A$2.75
• F&P Healthcare Raised to Outperform at Macquarie; PT NZ$28.09
• Johns Lyng Rated New Outperform at Macquarie; PT A$7.50
• Rex Minerals Rated New Outperform at Macquarie
• IPH Rated New Accumulate at CLSA; PT A$8.80
• Lottery Corp. Rated New Buy at Citi; PT A$5.70

Major Movers Today

Have a great night

The Market Matters Team

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