Australia’s tech players continue to fall for its second straight day as uncertainties on unresolved headwinds with inflation, the path forward with interest rate hikes compounded by Russia’s invasion of Ukraine weigh on investor’s minds.
At noon, the local bourse is trading 0.4 per cent or 27 points lower at 7,463 with the SPI futures pointing to a fall of 27 points.
The local bourse received a weak lead from Wall St after market participants digested a medley of hawkish speak reinforced by the colour from the Fed’s March meeting minutes. Traders are concerned that the economy will move into a recession, following the series of hikes to combat persistent and hot inflation.
Fed vice chair Lael Brainard dropped the news of starting the process of reducing the balance sheet at a faster pace in May after Fed member John WIlliams advocated for 50 basis points. As Fed Chair Jerome Powell’s top people sung the same tune, the power of three spooked investors on fears that the liquidity which helped boost equity markets is set to be zapped away.
Best & worst performers so far
Seven sectors are in the red versus the four that are rallying amid this fabric with consumer discretionary falling 1.1 per cent, followed by financials, and industrials. Energy and materials are shedding the least by around 0.4 per cent each. In the winner’s corner are your traditional defensive sectors, property as the best performer up 0.8 per cent, followed by consumer staples, adding 0.5 per cent then healthcare and utilities.
When it comes to a stock standout, Magellan Financial Group’s (ASX:MFG) outflow eased to $1.1 billion from March 11 to 31, split between $500 million from retail and $600 million from institutional clients from the $5 billion during the period of February 25 to March 11. Shares surged on optimism as the best performer of the session, trading over 10 per cent higher to $17.02.
In the banks, Macquarie Group (ASX:MQG) is leading the losses by 1.2 per cent lower at $202.69 while Commonwealth Bank of Australia (ASX:CBA) is shedding the least by 0.2 per cent at $105.48.
Fortescue Metals Group (ASX:FMG) and Rio Tinto (ASX:RIO) are trading higher by 0.7 per cent and 0.1 per cent respectively. BHP (ASX:BHP) is bucking the trend, trading 0.2 per cent lower
Oil majors are lower while gold players are higher supported by the underlying commodity price with the likes of Woodside Petroleum (ASX:WPL) down 1 per cent at $33.37 while Newcrest Mining (ASX:NCM) is up 1 per cent at $26.88.
What we are watching today
Ord Minnett has retained its hold rating on ASX (ASX:ASX) and boosted its target price to $85.00 from $84.56. The move comes after the broker noted that derivative volumes fell in March while cash and capital raising transactions rose compared to a year ago, helped by market volatility and BHP making the ASX the primary home. Shares are trading 1.3 per cent lower to $81.58, along with the broader market.
Bell Potter retained its buy rating for Mineral Resources (ASX:MIN) and popped its price target by 21 per cent to $74.35. The move comes to reflect the miner’s lithium production plans. Shares are trading 0.3 per cent higher to $60.51.
Theme park operator Ardent Leisure (ASX:ALG) is set to exit the US entertainment sector after inking a deal to sell its Main Event business to Dave & Busters for $1.1 billion as per the AFR. Shares are on the move, surging 6 per cent to $1.38.
Telstra’s (ASX:TLS) outgoing chief executive Andy Penn says the Digicel deal is set to go ahead after a controversial super tax in Papua New Guinea overshadowing the takeover, according to The Australian. Shares are up 0.5 per cent to $3.95.
Virtus Health (ASX:VRT) is in a trading halt, pending a new offer from CapVest Partners. CapVest “intends to submit a revised proposal to Virtus but no details of the terms of that revised proposal have been provided at this time”.
Local economic news
The seasonally adjusted balance on goods and services surplus decreased $4,329 million to $7,457 million in February.
Goods and services credits (exports) rose $120 million to $48,769 million, driven by a rise in exports of non-monetary gold and cereal grains and cereal preparations.
Goods and services debits (imports) rose $4,449 million to $41,312 million, driven by increases in imports of processed industrial supplies, according to the Australian Bureau of Statistics.
Payroll jobs fell 0.6 per cent in the month to 12 March while the seasonally adjusted estimate for total dwellings approved rose 43.5 per cent. according to the Australian Bureau of Statistics.
Fortescue Metals Group (ASX:FMG) has raised $2 billion (US$1.5 billion) in senior notes offering more US$800 million for green projects and the balance to general corporate purposes. Shares popped 1.4 per cent to $21.97.
Bank of Queensland (ASX:BOQ) has named Racheal Kellaway as chief financial officer. Ms Kellaway is set to succeed current group chief financial officer and chief operating officer Ewen Stafford in July. Shares are trading 0.1 per cent lower to $8.46.
Kogan.com (ASX:KGN) has inked a deal with QBE Insurance (ASX:QBE) to offer home, motor and CTP insurance products under the Kogan Insurance online brand. Through this agreement, Kogan Insurance will offer home, including landlord and motor insurance products to customers. These insurance products will be issued and underwritten by QBE, and Kogan.com will earn commissions on sales of all Kogan Insurance policies. Shares in Kogan.com (ASX:KGN) are trading 2.2 per cent lower to $5.47 while shares in QBE Insurance (ASX:QBE) are down 1.5 per cent to $11.69.
Gold Road Resources’ (ASX:GRR) gold sales totalled 35,080 ounces at an average price of $2,434 per ounce in the March quarter, including delivering 8,700 ounces at an average price of $1,911 per ounce into forward sales contracts. Shares are trading 0.7 per cent lower to $1.49.
UBS rates Insurance Australia Group (ASX:IAG) as a sell, trimming its price target to $4.10 from $4.20. The broker reviewed its forecast for the insurer and believes the consensus expectations are far above its ability to increase margins into financial year 2023. This comes on the back of rising prices, inflation. The recent floods are set to compound these claims cost pressures. The broker prefers QBE Insurance (ASX:QBE) and Suncorp Group (ASX:SUN). Shares in IAG are trading 2.9 per cent lower at $4.25
Macquarie rates Polynovo (ASX:PNV) as an outperform with its price target of $1.60. The medical device company posted revenue growth of 59 per cent to $12.3 million in March. The broker believes the company will hit its fourth quarter sales in their flagship product Novosorb of $12.2 million and remains positive on the company as a medium to long term candidate. Shares are trading 1.8 per cent lower at $1.11.
Citi rates Siteminder (ASX:SDR) as a neutral with a price target of $5. The broker observes that the migration of its existing customers to its new platform is set to chip away at its short-term gross margins but anticipates margin improvement in this current financial year to financial year 2024. Citi expects its margin to grow 4 per cent from 81 per cent to 85 per cent in that period. The broker believes that the new platform will open up new selling opportunities due to its improved integration as it is designed to combine, digitise and simplify the ecosystem of booking channels, property management systems, and hotel related activities. Shares are trading 3.2 per cent lower $4.83.
Best and worst performers
The best-performing sector is real estate investment Trusts, up 0.9 per cent. The worst-performing sector is information technology, down 2.7 per cent.
The best-performing stock in the S&P/ASX 200 is Magellan Financial Group (ASX:MFG), trading 10.2 per cent higher at $17.05. It is followed by shares in Paladin Energy (ASX:PDN) and GrainCorp (ASX:GNC).
The worst-performing stock in the S&P/ASX 200 is City Chic Collective (ASX:CCX), trading 7.3 per cent lower at $3.19. It is followed by shares in Life360 (ASX:360) and PointsBet Holdings (ASX:PBH).
Commodities and the dollar
Gold is trading at US$1923.38 an ounce.
Iron ore is 0.4 per cent lower at US$160.20 a ton.
Iron ore futures are pointing to a fall of 1.3 per cent.
One Australian dollar is buying 74.98 US cents.