The Match Out: Stocks follow US markets lower post the Fed hike and hawkish rhetoric

A tough day for local stocks with the ASX200 closing down -0.64% on broad-based selling which saw over 70% of the market close down on the day. Overnight the Fed prepared investors for interest rates above 5% next year but equities are still unsure whether to embrace the comments as the worst is approaching fast or that this is higher than we expected and a recession is looming hence equities could fall further i.e. as we said this morning the next 48-hours are likely to dictate if we enjoy another seasonal Christmas rally.

• The S&P/ASX 200 lost -46 points / -0.64% to close at 7204.
• Consumer Staples (+0.73%) and Consumer Discretionary (-1.25%) / Materials (-1.35%) were the standouts in a risk-off session.
• The Australian index experienced a very quiet session compared to its US counterparts following the Feds rate hike and hawkish comments from Jerome Powell as investors seemed comfortable waiting on future leads.
• Coal stocks led the winners with Whitehaven (ASX: WHC) +3.9% and New Hope (ASX: NHC) +4.7% catching the eye although a lack of selling across the banks limited the losses for the index, the absolute winner on the day was the rarely discussed Blackmores (ASX: BKL) +7.5%.
• WHC was raised to a buy at Cit with a price target of $11.110 which appeared to help sentiment.
• On the other side of the ledger it was another bruising session for the ESG names with Pilbara (ASX: PLS) –11.4%, Core Lithium (ASX: CXO) -9.4% and Liontown Resources (ASX: LTR) -7.9% the worst performers in the ASX200 with Cit to become the latest broker to downgrade its 12-months outlook for lithium, only a few days after Goldmans very negative note.
• To rub salt into the wound the latest Lithium (spodumene) auction, number #13 since this process kicked off in 2020, delivers a lower price, down ~3.4%.
• In a very different manner, to the rest of 2022 gold stocks were firm while lithium stocks plunged with Regis Resources (ASX: RRL) +1% the market’s best.
• As for the big miners they had a quiet day at the office with most drifting less than -1%, BHP Group (ASX: BHP) -0.8%, RIO Tinto (ASX: RIO) -0.9% and Fortescue (ASX: FMG) -0.2%.
• Data out today showed the Australian jobless Rate holding at a 48-year low, the $A slipped under 68.3c aided by weakness in the greenback overnight.
• Gold was down $16 in Asia, trading just above $US1800/oz.
• Asian stocks also fell, the Hang Seng was down -1.3% and Japan’s Nikkei -0.4%, while China also slipped -0.4%.
• US Futures are up around +0.1%

ASX 200 Chart

Broker Moves

• Australian Unity Raised to Buy at Moelis & Company; PT A$1.76
• Region RE Cut to Hold at Moelis & Company; PT A$2.90
• Pro Medicus Rated New Sell at CLSA; PT A$54.25
• Integral Diagnostics Reinstated Reduce at CLSA; PT A$3.15
• SiteMinder Ltd Rated New Outperform at RBC; PT A$4
• Whitehaven Raised to Buy at Citi; PT A$11.10
• Iluka Cut to Sell at Citi; PT A$9.50
• New Hope Raised to Buy at Citi; PT A$6.70
• JB Hi-Fi Cut to Neutral at Credit Suisse; PT A$45.73
• Breville Cut to Underperform at Credit Suisse; PT A$18.61
• PAR AU Rated New Corporate at Edison Investment Research

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