The Match Out: Broad based selling knocks ASX off its perch

The daily Match Out for Wednesday 2 August with James Gerrish of Market Matters.
James Gerrish

Market Matters

A sea of red today from Shanghai to Sydney with stocks pulling back from recent highs, the RBA’s dovish move yesterday a distant memory as local reporting stumbles into gear.

  • The S&P/ASX 200 lost -96pts points / -1.29% to close at 7354
  • IT (-0.45%), Healthcare (-0.57%) & Staples (-0.74%) were relative performers but all sectors finished lower.
  • Utilities (-2.19%), Property (-1.95%) and Financials (-1.77%) the biggest drags.
  • For what it’s worth, ratings agency Fitch downgraded the US credit rating to AA+ from AAA, reflecting expected fiscal deterioration over the next three years as well as a high and growing general government debt burden.
  • Fitch have had the US on their top rating since 1994 so the move is a peculiar one. As Janet Yellen said this morning, it seems “arbitrary and based on outdated data”.
  • Travel agency Helloworld (ASX: HLO) + 1.34% upgraded its FY23 earnings guidance for the 3rd time, saying underlying EBITDA would be between $42-45m. The market was already expecting $41m so not a big change (but positive none-the-less).
  • AGL Energy (ASX: AGL) -4.8% hit today on a broker downgrade from Macquarie (to Neutral $11.43 PT)– we covered the stock this morning in a timely note – click here
  • BWP Trust (ASX: BWP) -3.27% fell despite a broadly inline result – some value starting to emerge here after years of being too expensive.
  • Calix (ASX: CXL) +2.66% signed off alongside Pilbara (ASX: PLS) +0.41% to move forward with their Lithium Spodumene processing demonstration plant. The project is aiming to reduce carbon emissions in the process by more than 80% and is just one of ~70 project Calix is currently working on. We own CXL, but it’s been weak of late.
  • PSC Insurance (ASX: PSI) +2.08% after saying it now expects to deliver $111m in earnings in FY23.
  • The Aussie Dollar was whacked 0.7% to 65.69c, it’s lowest level since February.
  • Iron Ore was lower in Asia dragging down Fortescue (ASX: FMG) -1.96%.
  • Gold was soft overnight before adding +$US5 in Asia to be $US1950 at our close
  • Asian stocks were weak, Hang Seng off -2.03%, the Nikkei in Japan fell -2.36%, while China lost -0.65%
  • US Futures are down, S&P -0.5% while Nasdaq Futures are off -0.76%.
  • Reporting Tomorrow: Nothing of note while Block (ASX: SQ2) & Resmed (ASX: RMD) are out Friday
  • Download the Market Matters Reporting Calendar Here

ASX200 chart

ASX200 chart 2 August 2023
ASX200 chart 2 August 2023

BWP Trust (ASX: BWP) $3.55

BWP -3.27%: The Bunnings landlord (85% of book leased to Wesfarmers) edged lower today in a soft market despite reporting FY23 results that were inline with expectations. Revenue of $158m v $157.7m expected with earnings per share (EPS) 17.68c v 17.9c consensus. The FY dividend of 18.29 as per programmed while they saw some slight revaluations lower of their portfolio, with reported NTA at $3.75. Nothing too much to turn the dial for BWP, although shares now trading ~20c below NTA which is a rare occurrence relative to a historical premium. Weakness across the broader property sector didn’t help shares.

BWP Trust (ASX: BWP)

BWP Trust weekly chart 2 August 2023
BWP Trust weekly chart 2 August 2023

Broker Moves

  • AGL Energy Declines After Macquarie Downgrades to Neutral
  • Pro Medicus Raised to Overweight at Wilsons; PT A$76.04
  • EVT Cut to Neutral at Citi; PT A$13.30
  • Sonic Healthcare Cut to Reduce at CLSA; PT A$36.40
  • Netwealth Cut to Underweight at Jarden Securities; PT A$14.10
  • Deterra Cut to Reduce at CLSA; PT A$4.90
  • MoneyMe Raised to Speculative Buy at Morgans Financial Limited
  • NTU AU Reinstated Speculative Buy at Argonaut Securities

Major Movers Today

ASX movers and losers 2 August 2023. Source: Bloomberg
ASX movers and losers 2 August 2023. Source: Bloomberg

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9 stocks mentioned

James Gerrish
Portfolio Manager
Market Matters

James is the Lead Portfolio Manager & primary author at Market Matters, a digital advice & investment platform with over 2500 members that offers real market intel & portfolios open for investment. He is also a Senior Portfolio Manager at Shaw and...

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