The Match Out: ASX falls, Bond yields rise as volatility remains

A tough day at the office for some areas of the market with a few stocks dropping double digits on weaker-than-expected updates, while interest rate sensitive sectors were back on the nose as US 10-year yields break above 4.1% e.g. Consumer Discretionary, Tech, and Healthcare. There was certainly no real bargain hunting on show, understandable as the Fed meeting looms in less than 2-weeks, “if in doubt stay out!”.

• The S&P/ASX 200 fell -69 points / -1.02% to close at 6730
• Energy (+3.13%) and Financials (+0.04%) led the line.
• IT (-3.76%), Materials (-2.43%) and Healthcare (-2.13%) all dropped more than twice the market.
• It seemed more a case of accepting lower levels after a weak open as opposed to aggressive Intra-day selling even as US Futures slipped off another -0.6% at one point during our time zone, only to bounce back late.
• Energy stocks continue to outperform both the market and the underlying crude oil price as they make hay while the sun shines.
• Woodside (ASX: WDS) +6.18% booking a record quarter and upgraded full-yearr guidance.
• Sandfire (ASX: SFR) -13% knocked on a weak quarterly – lots of work to do to meet FY guidance now.
• Megaport (ASX: MP1) -11.80% down again as the market shows its lack of tolerance for high valuations that aren’t supported by big growth rates.
• The banks continue to exhibit resilience to rising yields as 3 of the Big 4’s dividends loom in November – the financial sector finished higher.
• Suncorp (ASX: SUN) +3.1% rallied on a broker upgrade.
• Magellan (ASX: MFG) -4.81% fell despite laying out a pathway back to $100bn in FUM at their AGM today – better performance the first thing that needs to happen!
• The unemployment rate stayed stable at 3.5% in September.
• Iron ore was lower in Asia, down 2.5%
• Gold was flat at $US1631/oz
• Asian markets were mostly lower, the Nikkei in Japan was off 0.70%, while Hong Kong fell 1.8% and China was flat
• US Futures are marginally lower, S&P -0.13%

ASX 200 Chart

Woodside Energy (ASX: WDS) $34.56

WDS +6.18% Was a rare beacon of green today following their record output in the September quarter with sales up 70% to $9.3bn thanks in part to the acquisition of BHP’s Petroleum division. They also increased full-year guidance in an update that was hard to fault.

Sandfire Resources (ASX: SFR)

SFR – 13.23%: The copper miner was hit hard today following a weaker-than-anticipated 1Q result, both in terms of production lower which pushed up costs – a similar sort of story that we’ve seen from a number of mining companies this quarter. This dynamic undermined cash generation in the period and they are now heavily reliant on a strong 2H to achieve full-year guidance. Just when SFR has locked together a couple of solid operational updates, we get a poor one and given the market was starting to warm to them – MM included – this result saw a bigger share price reaction than it probably should have.

Broker Moves

• Suncorp Raised to Overweight at JPMorgan; PT A$13.25
• Insurance Australia Cut to Neutral at JPMorgan; PT A$5.40
• Silex Systems Rated New Buy at Canaccord; PT A$4.23
• 29Metals Cut to Reduce at CLSA; PT A$2.30
• Beach Energy Raised to Buy at CLSA; PT A$1.94
• Bapcor Cut to Neutral at Credit Suisse; PT A$6.60
• Beach Energy Raised to Add at Morgans Financial Limited
• Cronos Australia Cut to Hold at Bell Potter
• Costa Raised to Outperform at Credit Suisse; PT A$2.50
• 29Metals Cut to Sell at Canaccord; PT A$1.90
• Adrad Holdings Rated New Add at Morgans Financial Limited
• Whitehaven Cut to Negative at Evans & Partners Pty Ltd; PT A$9

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