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The ASX 200 snapped a three-week losing streak, though there was little conviction around the local market today, with the index slipping mildly lower by the close – although it did recover ~50 points from the morning low as US Futures traded up.
Trump’s decision to push back the deadline on striking Iranian energy assets bought markets a little breathing room, but not enough to materially improve sentiment. The Strait of Hormuz remains effectively closed, crude is still elevated, and while the immediate panic has cooled a touch, markets continue to price in the inflationary impact of constrained energy supply. That’s keeping pressure on duration-sensitive parts of the market while supporting areas leveraged to higher fuel costs and tighter energy markets.
That backdrop continues to create sharp divergence across sectors. Energy has been the obvious winner through this period, up almost 20% since the conflict began, though today was a more mixed session as traders balanced the supportive commodity backdrop against some stock-specific disruptions.
- ASX 200: 8,516.30 / -9.42pts / -0.11%
- AUD/USD: 0.6905 / +0.28%
- Best sectors: Energy +0.88%, Consumer Staples +0.41%, Utilities +0.36%
- Worst sectors: Industrials −0.41%, REITs −0.85%, IT −1.53%
- Lots of moves on the broker front today, particularly on the commodity side from UBS and Macquarie (MQG not shown in the broker moves section below as they were out late).
- Whitehaven Coal (ASX:WHC) +4.89% was the standout after UBS upgraded the stock to Buy, highlighting the benefit from higher gas prices, arbitrage opportunities and the prospect of increased gas-to-coal switching. They have a $10.10 PT.
- Sandfire (ASX:SFR) -0.31% was lower despite Macquarie upgrading the stock to outperform and $20.10 price target.
- Fortescue Metals (ASX:FMG) +1.71% was also in the sights of MQG, with the broker upgrading to Outperform and $22 target.
- They also tuned the dial on New Hope Corp (ASX:NHC) +4.04%, upgrading to buy equivalent and $7 PT.
- Ampol (ASX:ALD) +1.99% traded well as the market continued to respond to rising fuel costs, with diesel prices across Australia pushing sharply higher.
- Santos (ASX:STO) +1.27% rose modestly, continuing to benefit from the strong energy backdrop.
- Woodside Energy (ASX:WDS) +0.26% underperformed after confirming a shutdown at the North West Shelf due to Tropical Cyclone Narelle. Production continues at Macedon and Pluto, though with disruption also hitting other LNG facilities.
- NextDC (ASX:NXT) -7.89% was sold aggressively on reports they are abandoning their planned issued of a $500m subordinated bond given financial market volatility – probably a good move.
- Genesis Minerals (ASX:GMD) -3.93% was among the weakest of the gold names as investors continued to rotate away from the sector. Gold did bounce through the afternoon, but it wasn’t enough to arrest selling in the miners.
- Northern Star Resources (ASX:NST) -1.12% also drifted lower as gold equities remained out of favour.
- National Australia Bank (ASX:NAB) -1.34% was the weakest of the majors in what was a mixed session for the banks, a pocket of the market that again failed to provide much support to the broader index. ANZ Group (ASX:ANZ) -0.44%, Westpac Banking Corp (ASX:WBC) +0.69% & Commonwealth Bank (ASX:CBA) +0.26%.
- Suncorp Group (ASX:SUN) +0.12% was little changed after announcing CEO Steve Johnston would take a short period of leave following a medical procedure, with CFO Jeremy Robson stepping into the acting CEO role.
- BlueScope Steel (ASX:BSL) -0.41% slipped after outlining further initiatives to unlock value from its surplus land portfolio across NSW and Victoria.
- Silex Systems (ASX:SLX) -0.1% unchanged after its US joint venture secured preliminary approval for a US$98.9m incentives package tied to the planned Paducah laser enrichment facility in Kentucky.
- Oil was mildly lower – down around 1% on the day.
- Gold was up +$US77/oz during our time zone, trading $US4453/oz around our close.
- Asian markets were solid: China +0.9%, Hong Kong +0.9% and the Nikkei +0.4%.
- Global Futures: S&P 500 E-Mini +0.65%, Dow E-Mini +0.57%, FTSE +0.63%.
