Evening Wrap: ASX 200 flat + Uranium stocks are on the move
The S&P/ASX 200 closed 4 points lower, down -0.05%.
Another sleeper session with the Index mostly unchanged, Australia's manufacturing PMI remains in contraction while services shine, Biden and House Speaker Kevin McCarthy fail to reach an agreement but discussions described as 'productive' and uranium stocks are on the move, but is it just another fake rally?
Let's dive in.
Today in Review
Tue 23 May 23, 4:17pm (AEST)
Name | Value | % Chg |
---|---|---|
Major Indices | ||
ASX 200 | 7,259.9 | -0.05% |
All Ords | 7,447.4 | -0.04% |
Small Ords | 2,863.5 | -0.21% |
All Tech | 2,350.1 | +0.30% |
Emerging Companies | 2,065.3 | -0.32% |
Currency | ||
AUD/USD | 0.665 | -0.04% |
US Futures | ||
S&P 500 | $4,209.0 | +0.10% |
Dow Jones | $33,377.0 | +0.05% |
Nasdaq | $13,923.0 | +0.15% |
Name | Value | % Chg |
---|---|---|
Sector | ||
Financials | 6,198.0 | +0.77% |
Real Estate | 3,166.4 | +0.57% |
Energy | 10,931.1 | +0.35% |
Information Technology | 1,726.1 | +0.22% |
Health Care | 44,780.7 | +0.12% |
Communication Services | 1,561.6 | +0.10% |
Utilities | 8,483.8 | -0.22% |
Industrials | 6,853.1 | -0.54% |
Materials | 17,822.2 | -0.74% |
Consumer Staples | 13,151.6 | -0.83% |
Consumer Discretionary | 3,017.5 | -1.04% |
ASX 200 Session Chart
ASX 200 higher but closed off session highs (Source: Market Index)
Markets
There's not a whole lot going on. It's kind of like moving your mouse every 5 mins to make sure your status remains 'online'. The ASX 200 closed slightly lower from session highs of 0.34%. The weakness was mainly attributable to a pullback for resources, with the S&P/ASX 200 Materials Index down 0.74% from session highs of 0.45%. The US debt ceiling remains a closely watched catalyst, with Biden and House Speaker Kevin McCarthy failing to reach an agreement this morning on how to raise the US government's US$31.4tn debt ceiling with just 10 days before a potential default.
Economy
Australia’s Manufacturing PMI was unchanged at 48.0 in May.
Signals third consecutive monthly deterioration (reading below 50)
“Australia’s manufacturing sector continues to slow in May and is on track for a soft landing.” – Warren Hogan, Chief Economic Advisor at Judo Bank
“The manufacturing indicators do not signal recession. We would need to see a further marked deterioration in the manufacturing survey to be concerned about a sharper downturn.”
Australia’s Services PMI fell from 50.8 in May from 53.7 in the previous month.
“While input cost inflation eased in May, faster demand growth provided firms with better pricing power, leading to higher selling price inflation.”
“The recent strength in services results stands in contrast to manufacturing. Far from the risk of recession, the services PMI suggests that the risk is that the Australian economy is experiencing a pick-up in activity since February.”
““The pick-up in the services PMI is consistent with a stronger housing market in recent months, rising population growth and a pick-up in job advertising.”
Latest news
Natural Gas oma
Two major gas discoveries in less than two months: Omega Oil & Gas
Tue 23 May 23, 12:36pm (AEST)
Materials xam
ASX-listed explorer puts pedal to the metal at Mongolian copper-gold project
Tue 23 May 23, 12:21pm (AEST)
Materials ftl
Small cap lithium explorer set to drill around IGO's Greenbushes and Allkem's Mt Cattlin
Tue 23 May 23, 11:02am (AEST)
Market Wrap web qan
Morning Wrap: ASX futures flat, S&P 500 rocked by fake Pentagon explosion + UBS' best stock ideas
Tue 23 May 23, 8:27am (AEST)
Market Wrap
Evening Wrap: ASX 200 falls, Wisetech hits all-time high + How does the market perform in May
Mon 22 May 23, 4:50pm (AEST)
Materials add
BHP has a new exploration neighbour in Tanzania: Adavale eyes nickel potential at Luhuma
Mon 22 May 23, 3:41pm (AEST)
More News
Market Insights: Uranium
Uranium has been one of those commodities with a bullish long-term narrative but has failed to turn it into anything material in the near-term.
The Global X Uranium ETF is a targeted play on uranium mining and the production of nuclear components, and a good barometer for how the industry is performing. The ETF is:
Down 3.7% year-to-date
Down 1.4% in the last twelve months
Trading at the same levels as March 2021
Double pre-Covid levels
The ETF is tarting to make some moves again, rallying to a two-month high earlier this month and up 2.9% overnight. This begs the question: Are we on to something or is this just another move within its usual range?
Global X Uranium ETF chart (Source: TradingView)
A few updates and stats of interest:
A bill banning Russian uranium imports to the US passed a committee in the House of Representatives on 17 May 2023
US production of uranium concentrate (U3O8) was 2,511 points in the first quarter of 2023, which was a 75% drop compared to a year ago
In 2021, imports from Kazakhstan accounted for 35% of US nuclear supply, 14.8% from Canada, 14.4% from Australia and 13.5% from Russia. Only 5.3% of supply was produced from domestic sources, according to the US Energy Information Administration
Again, these stats sound pretty exciting and a positive for uranium. But let's see if the stocks and ETF can hold recent gains and push key price points (e.g. x month high and key moving averages).
Interesting news and movers
Trading higher
+20.1% OFX Group (OFX) – Earnings
+12.3% Silk Laser (SLA) – New Competing Takeover
+7.4% Catapult (CAT) – Earnings
+3.5% New Hope (NHC) – Earnings (Mon)
+3.2% Tabcorp (TAH) – Upgraded by Morgan Stanley
+2.8% Technology One (TNE) – Earnings
Uranium sector move: Bannerman (+9.2%), 92 Energy (+6.7%), Alligator Energy (+6.1%), Paladin Energy (+5.3%), Deep Yellow (+4.8%)
BNPL sector move: Zip (+12.7%), Sezzle (+3.2%)
Trading lower
-17.7% Brainchip (BRN) – Pullback after +24.4% in previous three
-3.0% Sonic Healthcare (SHL) – Initiated Sell at UBS
-2.2% Webjet (WEB) – Downgraded by RBC (Mon)
-2.2% Qantas (QAN) – Market Update
Broker notes
Morgan Stanley notes from Tuesday, 23 May:
City Chic (CCX): Equal-weight with $0.60 target price
“We think this market update is below consensus expectations, placing further downside risk on FY23/24 earnings forecasts.”
“The LT impact on CCX's brands from aggressive discounting remains unknown, with a risk that gross margins are permanently impaired if discounts become entrenched.”
Lendlease (LLC): Equal-weight with $9.50 target price
“LLC has sold a 21% interest in its US Military Housing asset management business for A$126m, translating to a A$75m benefit to NPAT in FY23.”
“LLC now anticipates that Development segment ROIC will be 2.50-3.25% (down from the lower end of the 4-6% range previously).”
“Our understanding is that slower transactions in the current environment have impacted timing of transactions (eg, Victoria Cross sell- down, timing of some residential).”
Tabcorp (TAH): Overweight with $1.30 target price
“We expect the announcement of the VIC license award around mid- 2023,ahead of its expiry in mid-2024.”
“We see meaningful upside to TAH's future earnings trajectory (+25% FY25e) if it successfully retains the license, thanks to the potential reset of fees and taxes.”
“Moreover, we expect that even under a scenario whereby TAH loses the retail license (and operates on a digital-only basis), its earnings would be no worse than under the current arrangement.”
Webjet (WEB): Equal-weight with $6.50 target price
“Ahead of WEB's FY23 result on Wed 24th May we set out guidance, consensus expectations and where we feel the focus will be in terms of FY24's outlook.”
“We are attracted to the recovery tailwinds in travel but prefer the earnings visibility of peers, so stay EW into FY23 results.”
“We are bullish on travel exposed names but see greater certainty in the pathway to FY24 cons expectations in other names including CTD,yet CTD trades at more modest multiple (19x cons vs 27x for WEB).”
Scans
Top Gainers
Code | Company | Last | % Chg |
---|---|---|---|
WSR | Westar Resources Ltd | $0.078 | +56.00% |
TSL | Titanium Sands Ltd | $0.012 | +33.33% |
DBO | Diablo Resources Ltd | $0.049 | +28.95% |
AX8 | Accelerate Resour... | $0.023 | +27.78% |
RTG | RTG Mining Inc | $0.073 | +23.73% |
View all top gainers
Top Fallers
Code | Company | Last | % Chg |
---|---|---|---|
BGT | Bio-Gene Technolo... | $0.095 | -20.83% |
AJL | AJ Lucas Group Ltd | $0.016 | -20.00% |
AW1 | American West Met... | $0.057 | -18.57% |
BRN | Brainchip Holding... | $0.42 | -17.65% |
LME | Limeade Inc | $0.12 | -17.24% |
View all top fallers
52 Week Highs
Code | Company | Last | % Chg |
---|---|---|---|
WSR | Westar Resources Ltd | $0.078 | +56.00% |
RTG | RTG Mining Inc | $0.073 | +23.73% |
SLA | Silk Laser Austra... | $3.36 | +12.00% |
ZEU | ZEUS Resources Ltd | $0.031 | +10.71% |
CVL | Civmec Ltd | $0.78 | +8.33% |
View all 52 week highs
52 Week Lows
Code | Company | Last | % Chg |
---|---|---|---|
AJL | AJ Lucas Group Ltd | $0.016 | -20.00% |
CYP | Cynata Therapeuti... | $0.13 | -13.33% |
RRR | Revolver Resource... | $0.11 | -12.00% |
LKY | Locksley Resource... | $0.058 | -9.38% |
MPA | Mad Paws Holdings... | $0.10 | -9.09% |
View all 52 week lows
Near Highs
Code | Company | Last | % Chg |
---|---|---|---|
WTC | Wisetech Global Ltd | $73.165 | +0.21% |
NDIA | Global X India Ni... | $61.72 | +0.73% |
STO | Santos Ltd | $7.42 | +0.54% |
USD | Betashares U.S. D... | $14.79 | -0.07% |
CSL | CSL Ltd | $309.32 | +0.68% |
View all near highs
Relative Strength Index (RSI) Oversold
Code | Company | Last | % Chg |
---|---|---|---|
URW | Unibail-Rodamco-W... | $3.58 | +0.56% |
AMA | AMA Group Ltd | $0.133 | +1.92% |
MTS | Metcash Ltd | $3.63 | -1.09% |
CCR | Credit Clear Ltd | $0.215 | +4.88% |
VUL | Vulcan Energy Res... | $3.99 | -5.00% |
View all RSI oversold