Commodities and banks both ended lower, resigning the market to a second consecutive fall. Selling was sustained throughout the day, mostly driven by overnight leads from the US, which reopened after a long weekend, and also soft commodity numbers in overseas trade. The big 4 all finished lower, while BHP & Rio fell 2.9% & 3.5% respectively. Sirtex upgraded guidance, helping healthcare end higher. Bellamy’s showed continued strength after upgrading numbers yesterday - this has also helped Chinese facing stocks in the past few days, such as A2M which also announced a greater push in to the US, finishing 2.4% higher. Suncorp managed to end better despite ASIC requesting the insurer refund customers $17mil for some dodgy car cover. All in all, a very similar day to yesterday when we wrote Really a day where the market collectively was soft yet a few stock specific stories helped to keep things interesting.
Real Estate topped the charts today, helped by shopping centre managers Scentre Group and Vicinity Centres finding some relief from 5 soft days. Materials were unsurprisingly the weakest, with their index falling over 2%. Overall, a range today of +/-24 points, a high of 6036, a low of 6012 and a close of 6015, down 32 pts or -0.54%.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
CATCHING OUR EYE
1. Sirtex (SRX) $17.83 / +13.93%; the biotech & medical device company jumped today after a trading update that reported a material uplift in EBITDA, rising to $34Mil in the first half of the financial year, a 16% increase to the first half of FY17. Sirtex also provided full year guidance to $75-$85mil, up around 30% on the previous year, driven by increases to sales and productivity. The forecasts are particularly significant as SRX has missed the EBITDA guidance 3 of the last 5 reports, and today investors seemed to forgive and forget the recent troubles – along with plenty of shorts likely covering – sending SRX up ~20% in early trade before easing slightly. Sirtex will announce audited numbers on the 21st of February.
Sirtex (SRX) Daily Chart
2. South32 (S32) $3.92 / -1.51% ; good production numbers released today, despite S32 closing softer. Manganese was the standout, with good numbers at a time where prices have been strong. Guidance for their South African manganese operation was also increased by 8% for the year, the highlight of the result. Demand for steel inputs remain high and S32 remain well positioned to benefit. South32 has advanced on the strongly from the rally in base metals and today’s weakness was likely a sign of investors using a strong result to lock in profits. We like S32, however wold be looking to enter at lower levels.
South32 (S32) Daily Chart
3. Oz Minerals (OZL) $9.17 / +0.99%; OZL also released their Q4 update, finishing the year with a wet sail to beat Gold expectations and meet copper guidance for the year while also increasing copper guidance for 2018 by ~10%. The increase in copper production will be to the detriment on their gold output, however the market brushed the shift, preferring to see OZL continue the move towards the red metal as has been occurring over the past few years. Other highlights was the lift in free cash flow, adding $90mil to the OZL accounts in the quarter and the continued decline in production costs/lb. We like OZL, however we are looking to enter around $8.
Oz Minerals (OZL) Daily Chart
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Have a great night
James & The Market Matters Team
James is a Portfolio Manager within Shaw and Partners heading up a team that manages direct equity and option portfolios. He is also the Primary Contributor to Market Matters, a daily investment report that offers real market insight.