Tech rout deepens on looming rate hikes, Uniti soars, Pendal drops PPT deal: ASX down 0.7% at noon

Market Reports

by Melissa Darmawan

The threat of a steep rate hiking cycle opened Aussie shares to vulnerability as investors continue to sell-off bonds and equities ahead of the next inflation print.

China opened the week with consumer and producer prices coming in higher than expected with Wall St and Main St expecting the headline inflation rate to come in at 8.4 per cent from the 7.9 per cent in February.

The future value of growth stocks like information tech has spooked investors as a rally in treasury yields puts these stocks under pressure. These concerns have persisted as information tech is selling off for its fifth straight session down 1.2 per cent on the local bourse.

Deep in the loser’s circle includes utilities as the worst performer falling 1.8 per cent followed by energy stocks as crude prices closed 4 per cent lower. The performance is far from pretty with no sectors rising on this broad based sell-off with communication services shedding the least by 0.3 per cent.

However, there are some green shoots in this red backdrop with a few individual stock standouts. Bluescope Steel (ASX:BSL) is on the move, trading 1.9 per cent higher to $21.12 amid ETF provider State Street now having a 5 per cent stake in the company according to a regulatory holding.

Iress (ASX:IRE) has dropped its plans to sell off its UK mortgages business due to increased global market volatility and declining tech company valuations. Shares are trading higher by 1.6 per cent to $11.78.

Gold miner Northern Star (ASX:NST) is up 1 per cent to $10.77 while Evolution Mining (ASX:EVN) has popped 1.5 per cent as investors search for safety.

Pendal Group (ASX:PDL) intends to commence an on-market share buyback of up to $100 million following the release of its financial results for the six months to March 31, scheduled for May 10 this year. Meanwhile the fund manager shunned the takeover bid received by Perpetual (ASX:PPT) as it “significantly undervalues” its current and future value and therefore is not in the best interests of shareholders. Shares are trading 0.9 per cent lower at $5.25

Lynas Rare Earths (ASX:LYC) has reported a record quarter for the period ending March 31. Lynas delivered record sales revenue of $327.2 million, up from $202.7 million in the prior corresponding period. The company reported record sales receipts of $262 million, up from $151 million in the prior corresponding period. Shares are trading 2.1 per cent lower to $9.62.

Meanwhile amid news that Commonwealth superannuation corporation is in late-stage talks for a 20 per cent stake in Uniti Group (ASX:UNI) as part of its buyout, according to the AFR, Uniti shares are the best performer of the session.

At noon, the S&P/ASX 200 is 0.7 per cent or 50.90 points lower at 7434.30.

The SPI futures are pointing to a fall of 58 points.

Local economic news

Consumer confidence increased by 1.2 points to 94.6 this week after average petrol prices in Australia dropped by around 20 cents per litre last week to $1.74 per litre. The price at the pump is now down around 40 cents per litre since peaking in mid-March at $2.13 per litre as per ANZ and Roy Morgan.

Business conditions surged higher in March and confidence also strengthened. Trading conditions and profitability rose markedly, suggesting demand remains strong, and employment also rose. The improvement was largely driven by the retail sector, which saw conditions rise 23 points, as well as recreation and personal services and finance, business and property as per NAB business survey.

Broker moves

UBS dropped its price target for Woodside Petroleum (ASX:WPL) by 5 per cent to $32.90 and maintained its neutral rating. The oil major published the Independent Expert's Report for its proposed merger with BHP’s petroleum arm, valuing it up to 19 per cent lower than UBS’ estimate. The fall in the price target is due to the broker’s reduced valuation for two oil fields in West Africa and Mexico. Shares are trading 1.2 per cent lower at $31.68.

Morgan Stanley downgraded ANZ’s (ASX:ANZ) rating to equal-weight from overweight with a price target of $28.60. The broker cites several ongoing challenges including a weaker outlook in New Zealand with falling margins and lower non-interest income set to weigh on revenue this year. The broker believes that the bank has weaker volume growth compared to its peers, reducing its price target by 6 per cent to $28.60 from $30.30. Shares are trading 1.3 per cent lower at $27.33.

Macquarie downgraded Nearmap (ASX:NEA) to neutral from outperform with a target price of $1.40. The broker believes that the aerial imagery company is set to face headwinds penetrating the North American market for the claims insurance segment due to being late to the game. Macquarie cited that its competitor EagleView holds strong measuring technology patents compared to the company as Nearmap faces limitations on software integration. Shares are trading 2.9 per cent lower $1.36.

Best and worst performers

All sectors are in the red. The sector with the fewest losses is industrials, down 0.3 per cent. The worst-performing sector is energy, down 1.5 per cent.

The best-performing stock in the S&P/ASX 200 is Uniti Group (ASX:UWL), trading 2.8 per cent higher at $4.81. It is followed by shares in Regis Resources (ASX:RRL) and St Barbara (ASX:SBM).

The worst-performing stock in the S&P/ASX 200 is Novonix (ASX:NVX), trading 8.2 per cent lower at $5.73. It is followed by shares in City Chic Collective (ASX:CCX) and Imugene (ASX:IMU).

Commodities and the dollar

Gold is trading at US$1956.53 an ounce.
Iron ore is 2.6 per cent lower at US$150.60 a ton.
Iron ore futures are pointing to a rise of 0.45 per cent.
One Australian dollar is buying 74.17 US cents.

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