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The Match Out: Market snaps 7-day winning streak, Energy stocks lag

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The market snapped its seven-day winning streak today with ~60% of the market closing lower, led by weakness in the Energy stocks which succumb to Crude Oil’s decline overnight, while the consumer discretionary sector was hit by a downgrade from UBS. The afternoon session saw the most action as the market slid sharply lower into the close chalking up a bearish close.

  • The ASX 200 finished off -42pts/ -0.58% at 7314
  • The Staples sector was best on ground (+0.71%) and only sector to finish higher while Utilities (-0.05%) & Healthcare (-0.07%) outperformed.
  • Energy (-1.34%) and Consumer Discretionary (-1.20%) the weakest links.
  • Magellan (ASX: MFG) +4.08% a positive session on an otherwise soft day – optimism here seems to be building around the potential for a turnaround.
  • TPG Telecom (ASX: TPG) -5.40% hit after the Australian Competition Tribunal upheld the ACCC’s decision to block Telstra and TPG’s proposed deal to share regional network infrastructure and mobile spectrum. Apparently the move would reduce competition!
  • Flight Centre (ASX: FLT) -6.88% was whacked after failing to upgrade earnings at their strategy day, seems the market was primed for a more positive spin.
  • Dexus (ASX: DXS) +1.18% has updated its property values, with the book value likely to be down 6% for the 6-months to June 30 i.e. a better outcome than the share price implies.
  • UBS downgraded their views around consumer discretionary stocks following a deep dive survey of consumers.
  • We love the UBS evidence lab research and this morning the survey results showed a softening underbelly to Aussie consumption.
  • As a result, they lowered earnings estimates for HVN, JBH, LOV and UNI, and downgraded ratings on AX1, DMP, PMV and SUL from Neutral to Sell.
  • Premier (ASX: PMV) -4.9% was hit hard a consequence of the downgrade.
  • Cleanaway (ASX: CWY) -3.55% fell following a strategy day where they focussed on business priorities out to 2030.
  • Morgan Stanley published a very bullish note on Suncorp (ASX: SUN) +0.07% calling it a buy, while reiterated their positive views on the insurers.
  • AGL Energy (ASX: AGL) -0.18% slipped a touch after Mike Cannon-Brookes Grok Ventures sold less than 1% of their AGL stock, while saying they were happy with the progress AGL had made.
  • They went onto say this should not be seen as a broader divestment plan or change in our focus. MM remains long AGL.
  • Iron Ore was lower in Asia today dragging down the exposed miners.
  • Gold was down overnight and largely flat in Asian trade at ~US$1934 by our close.
  • Asian stocks were mostly down, Hong Kong off -2.06%, Japan +0.69% while China fell -1.12%
  • US Futures are marginally lower, off around -0.12%

ASX 200 Chart

Dexus (DXS) $8.19

DXS +1.18%: Completed external revaluations on 175 of their 182 assets, comprising 32 office properties and 143 industrial properties with the draft results showing a decline of 6% for the 6 months to June 30, which is well short of the 30% fall implied by its current price-to-book discount. Office assets were cut 7.7% to around $11.5 billion while Industrial assets saw a more tepid re-rate lower. Not great but a better result than many thought we suspect.

TPG Telecom (TPG) $5.26

TPG -5.4%: struggled today after failing to overturn last year’s ACCC decision to deny an agreement with competitor Telstra which would have seen the two share the network in regional areas of the country. The deal announced in February would have vastly extended TPG’s reach and allowed many Australians an alternative to Telstra’s often more expensive mobile plans. The company maintained FY23 guidance which now includes $20-25m in one-off costs, however, the stock fell given it is facing a significant CAPEX bill to build out their regional offering, though these plans are likely to take time to implement. Shares bounced off intraday lows today.

Broker Moves

  • Cosol Rated New Buy at Bell Potter; PT A$1
  • Bluescope Cut to Neutral at Citi; PT A$23.50
  • PointsBet Raised to Neutral at JPMorgan; PT A$1.35
  • Chalice Mining Raised to Overweight at JPMorgan; PT A$7.60
  • Regis Healthcare Raised to Buy at Moelis & Company; PT A$2.64

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