ASX dips 0.3%, Whitehaven Coal tumbles, Coles' sales rise, A2 Milk's rating gets upgraded

Market Reports

by Melissa Darmawan

The Australian sharemarket slipped at the open though slowly found its footing towards lunchtime as investors watched the commodities pull-back. The local bourse is on track to snap its winning streak after the index hung onto its gains the past four trading sessions amid AGMs and trading updates on tap. At noon, the S&P/ASX 200 is 0.3 per cent or 18.9 points lower at 7,430. The SPI futures are pointing to a fall of 13 points.

Energy and mining stocks are leading the declines after prices in iron ore and oil tumbled two and three per cent respectively. The healthcare sector is trying to cling onto its gains, marginally rising 0.3 per cent as CSL (ASX:CSL) pops higher by 0.5 per cent at $300.48. The other sectors are in the red.

China’s thermal coal price dived 13 per cent overnight dragging Whitehaven Coal (ASX:WHC) lower by over 9.1 per cent at $2.57. The miner is on track for its worst day since mid-April this year.

Gold players are also feeling mixed as the price of gold edged lower. Newcrest Mining (ASX:NCM) is trading over 0.8 per cent lower at $25.13. Regis Resources (ASX:RRL) fell over 0.3 per cent at $2.01 recovering from a 1.0 per cent fall in the morning, while Evolution Mining (ASX:EVN) is bucking the lacklustre performance trading 0.4 per cent higher at $3.68.

Reliance Worldwide (ASX:RWC) has continued to rally trading 3.6 per cent at $5.63. Investors continued to mull on the plumbing parts company’s benefit from acquiring EZ-FLO after several brokers upgraded its rating and target price for the company yesterday. To find out what Macquarie said, click here.

ANZ (ASX:ANZ) is leading out of the major four adding 1.0 per cent at $28.67 after posting a $6.2 billion full-year profit from continuing operations, a 65 per cent surge from a year ago. The bank attributed its performance by a partial reversal of Covid-19 related credit provisions. Westpac shares (ASX:WBC) are trading higher by 0.7 per cent at $26.14 ahead of their full year update next Monday. Commonwealth Bank (ASX:CBA) is lagging, just by 0.03 per cent at $106.07.

Coles (ASX:COL) is edging higher by 0.8 per cent at $17.47 after they posted a quarterly update. The moves followed Woolworths (ASX:WOW) results yesterday where investors booked their profits on the back of the uncertain outlook. Coles posted a 1.5 per cent jump to $9.7 billion in supermarket sales thanks to strong performances across its supermarket and alcohol businesses. Unlike Woolworths' comments yesterday, the supermarket giant is optimistic about its outlook as restrictions start to ease. The company has flagged that current fuel volumes is set to impact on revenue with expectations that it will recover in the second half of financial year 2022. Shares in Woolworths (ASX:WOW) are trading 1.5 per cent lower at $38.58.

Elsewhere, Fortescue Metals (ASX:FMG) is up 0.6 per cent at $14.09 after iron ore rose 3.0 per cent to 45.6 million tonnes in the September quarter, a record high for the period. The miner achieved an average revenue of US$118 per dry metric tonnes, around three quarters of the average price of the commodity according to the Platts 62 per cent CFR index. Production guidance for the 2022 financial year remains unchanged.

JB Hi-Fi (ASX:JBH) is trading 1.9 per cent higher at $47.76 despite lockdowns weighing heavily on sales growth on AGM day. The electronics goods giant said that conditions have improved, more so in New Zealand.  However, the group overall notched a declined in the period when compared to a bullish output last year, after Aussies were spent on home office equipment due to the lockdowns.

Priceline owner Australian Pharmaceuticals (ASX:API) posted an after tax profit of $1.1 million for the full-year. Shares are trading 0.1 per cent higher at $1.51.

PointsBet (ASX:PBH) plummeted over 13 per cent to $9.15 after investors reacted to its quarterly update. Customer growth was seen in the US and Australia however, the company notched a $26.6 million spend in operations for the quarter.

Elsewhere, IOOF (ASX:IFL) dived over 5.6 per cent at $4.33 as the wealth manager prepares to rebrand to Insignia Financial at a cost of up to $3.0 million. The wealth giant reported that funds under management hit $321.1 billion, up $2.4 billion over the September quarter. The name change is subject to shareholder approval at its AGM in November. 

Across the tech players, they are trading in the red following a weak lead from Wall St. Afterpay (ASX:APT) are trading over 2.2 per cent lower while Zip Co (ASX:Z1P) are down 0.9 per cent.

Local economic news

The Australian Bureau of Statistics released import and export figures for the September quarter. Exports rose 6.2 per cent while imports grew 5.4 per cent during the period.

The biggest contributors were coal, coke and briquettes, thanks to surging global demand for thermal and coking coals. Gas, natural and manufactured were the second group of contributors due to the rise in oil-linked contracts capturing the continued oil price rises this year.

Broker moves

Credit Suisse upgraded A2 Milk (ASX:A2M) to a neutral from an underperform with a raised target price of $5.75.

The broker’s rate hike reflected the rising English label sales and bullish market share targets for China. However, Credit Suisse notes that the total market is weak, and risk remains despite the company’s ambitious outlook. The slowdown in newborns and tightening government regulation is also a concern. Despite this, analysts believe that most of this has already been priced in. Target price rises to $5.75 from $5.50

Shares in A2 Milk (ASX:A2M) are trading 0.8 per cent higher at $6.08.
 
Best and worst performers

The best-performing sector is Health Care, up 0.2 per cent. The worst-performing sector is Energy, down 1.3 per cent.

The best-performing stock in the S&P/ASX 200 is Boral (ASX:BLD), trading 4.8 per cent higher at $6.62. It is followed by shares in Reliance Worldwide (ASX:RWC) and JB Hi-Fi (ASX:JBH).

The worst-performing stock in the S&P/ASX 200 is PointsBet Holdings (ASX:PBH), trading 12.5 per cent lower at $9.24. It is followed by shares in Whitehaven Coal (ASX:WHC) and Codan (ASX:CDA).

Commodities and the dollar

Gold is trading at US$1794.87 an ounce.
Iron ore is 2.0 per cent lower at US$119.86 a ton.
Iron ore futures are pointing to a fall of 2.2 per cent.
One Australian dollar is buying 74.96 US cents.

Are you a 708 sophisticated investor?

A sophisticated investor is defined under Section 708 of the Corporations Act (net assets of $2.5 million or annual incomes in excess of $250,000).

They are eligible to receive information regarding wholesale investment opportunities that are not available to regular or retail investors.

Please subscribe if you would like to be alerted to these types of opportunities.