The Match Out: ASX takes a breather as RBA moves again

• The ASX 200 finished down -34pts/ -0.47% at 7291.
• The Utilities sector was best on ground (+0.53%) while Industrials (+0.33%) & Staples (+0.23%) were also positive during the session.
• IT (-2.04%) and Real-Estate (-1.04%) the weakest links thanks to bond yields in the US ending higher overnight.
• The RBA raised rates today by 0.25% taking the cash rate to 3.1% with only 2 more hikes priced in by markets. More on this below.
• Local bond yields were up implying that not all of the 25bps was priced in – 3-year yields +7bps to 3.08%.
• The AUD was also higher, up +0.40% to 67.26c.
• Research Lead Shawn Hickman on Ausbiz this morning talking about our broader market views – Watch Here – we though the RBA may sit tight today – we were wrong.
• Markets @ Midday was missed unfortunately – back tomorrow.
• UBS upgraded LendLease (ASX: LLC) (no change) overnight putting a valuation of $11.15 (prior $10.95) & buy rating with Tom Bodor saying that the LLC share price ($7.48) is implying either: 1) a cost of equity of ~16% (vs. UBSe 10%) or 2) earnings 60% lower than UBSe over the forecast period assuming a Ke of 10%. In other words, the stock is dirt cheap although I can’t ever remember making money on LLC!
• We recently looked at SmartGroup Corporation (ASX: SIQ) -5.14% following their rally last week on rumours of private equity interest, however, we think the demand for leasing looks tepid over the coming year – we take a look at new vehicle data below as it relates to SIQ & others.
• Coal stocks bounced today, Whitehaven Coal Limited (ASX: WHC) +2.72% and New Hope Corporation (ASX: NHC) +2.12% despite all the talk on price caps.
• Betty’s Burgers have had a record year thanks in part to my eldest, they said today that while input prices for chips, chicken and oil were higher, it was being offset by the falling costs of beef, bacon and buns – so no further price increases were planned (phew!). Betty’s has 54 outlets around the country.
• Iron Ore was ~2% lower in Asia today prompting some profit taking in Fortescue Metals Group (ASX: FMG) -1.57%
• Gold was hit 1.7% overnight and was flat today trading at ~$US1770
• Asian stocks were mixed Hong Kong down -1.21%, Japan +0.29% while China was off -0.16%
• US Futures are flat.   

ASX200

RBA Today – Increased rates another 25bps to 3.10%

The RBA has increased the cash target rate by 25 basis points to 3.10%. The key phrase “The Board expects to increase interest rates further over the period ahead” remains, but a caveat is added: “but it is not on a pre-set course”

Australian Interest Rate Futures – Source Shaw & Partners

New car market

Vehicle sales are important for a bunch of ASX stocks from car dealers to novated leasing providers and even further up the chain to monitor the sales of electric vehicles (EV’s) as a proportion of the pie which will show trends across local adoption and the like. For October there were 95k new cars sold, an increase of 18% from this time last year and +12% vs 2019. Of those sales, 4,886 or 5% were EV sales, increasing from 3% share the prior month. Vehicle supply remains tight and monthly deliveries remain choppy – my Uber driver on the weekend saying he was guided to a 24-month wait on the Rav 4 hybrid! While this undersupply underpins new car dealer margins now, we are starting to see used car prices roll over and it’s only a matter of time before this starts to impact new car prices (and thus margins) – i.e. the car market will likely have a tougher period ahead (ASG & APE), including the novated leasing and salary packing companies (SIQ & MMS).

SmartGroup (ASX: SIQ)

Broker Moves

• Mesoblast (ASX: MSB) Cut to Hold at Jefferies; PT A$1.25
• Beach Energy (ASX: BPT) Cut to Hold at Morgans Financial Limited; PT A$1.91
• Environmental Group (ASX: EGL) Rated New Buy at Bell Potter
• OZ Minerals (ASX: OZL) Cut to Hold at Jefferies; PT A$28.25
• Northern Star (ASX: NST) Cut to Hold at Jefferies; PT A$10.50
• Gold Road (ASX: GOR) Cut to Hold at Jefferies; PT A$1.80
• Chalice Mining (ASX: CHN) Cut to Hold at Jefferies; PT A$6.60
• Chrysos Corp. (ASX: C79) Rated New Buy at Shaw and Partners; PT A$5.40
• Treasury Wine (ASX: TWE) Cut to Neutral at Credit Suisse; PT A$13.80

Major Movers Today