ASX200 Afternoon Report April 28th 2022

After a 5% correction from last week's 7625 high, the ASX200 today snapped a three-day losing streak to be trading up 74 points or 1% at 7335 at 2 pm Sydney time.

The source of the rebound was a thumping earnings report from Meta Platforms this morning that propelled its share price 18% higher in after-hours trading, along with a 1.36% rally in Nasdaq 100 futures.

This earnings season has once again provided its fair share of prominent "misses" from the likes of Netflix; however, nerves are starting to settle. Of the 159 S&P 500 companies to report earnings so far, 55% of companies have beaten consensus estimates by greater than one standard deviation versus the historical average of 47%.

Settling the nerves of local investors, dip buyer hunters have again moved to scoop up resource stocks after absolute panic in the space. Some of the largest falls over the past week included BHP Group (BHP) - 15%, Mineral Resources (MIN) –15%, Rio Tinto (Rio) -12%, and Fortescue Metals (FMG) -11.75%.

After Fortescue Metals (FMG) reported that it is on track to set a new export record, its shares lifted by 6.3% to $21.32. Mineral Resources (MIN) added 5% to $58.29. BHP Group (BHP) added 3.67% to $47.70, while Rio Tinto (Rio) added 2.5% to $111.67.

Coal mining, oil and energy stocks continued to springboard higher after Russia made good on its threat to cut off natural gas supplies to Poland and Bulgaria. The gas market is on a knife-edge, and the price is just one disruption away from catapulting higher again.

Whitehaven Coal (WHC) added 6.25% to $4.93, New Hope Coal (NHC) added 5.1% to $3.48, Coronado Coal (CRN) added 5% to $2.32, while Yancoal (YAL) added 5.1% to $5.31. AGL added 1.69% to $8.44, Origin Energy (ORG) added 0.75% to $6.70 and Santos (STO) added .25% to $7.90. 

A disappointing day for the local IT sector despite the likelihood that tech stocks in the U.S ride the updraft of the bumper Meta earnings report. Tyro Payments (TYR) fell 4.5% to $1.18, Appen (APX) fell 2.2% to $6.30, Altium (ALU) fell 1.25% to $31.95, Xero (XRO) lost 0.9% to $93.68. Life 360 (360) and EML Payments (EML) remained shunted in the hurt locker down 0.6% and 0.5% respectively.

Following yesterday's red-hot inflation report, the market is now fully priced for RBA rate hike lift-off next week. There is 22bps currently priced for the May meeting, implying a very high chance of at least a 15bps hike and ~35% chance of a 40bps hike. 

The prospect of earlier rate hikes and surging inflation has filtered through into a mixed day for the banks. National Australia Bank (NAB) fell 0.56% to $32.02, Commonwealth Bank (CBA) fell 0.2%% $102.86. ANZ added 0.5% to $27.04, Westpac (WBC) added 0.55% to $23.59.

In a rare moment of good news for AMP shareholders, the stock has surged 13% to $1.16 after selling its private markets equity business to Digital Bridge in a deal valued up to $699mio.

A mixed day also for Lithium names. Iluka Resources (ILU) added 4.2% to $11.01, Galan Lithium (GLN) added 3% to $1.73, Pilbara Mines (PLS) added 2.9% to $2.68. Allkem (AKE) fell 3% to $11.63, and Vulcan Energy (VUL) fell 2.45% to $8.73.

Unable to fight the battle any longer against a stronger U.S dollar and higher yields, gold has fallen below $1880 overnight, a move that has weighed on local goldies.

Silver Lake (SLR) shares fell 8.4% to $1.84 after the company withdrew FY2022 guidance, echoing the theme of mining companies citing uncertainties stemming from staffing pressures. Elsewhere Newcrest Mining (NCM) fell 2.11% to $26.41. Evolution Mining (EVN) fell 1.37% to $3.96, and Northern Star (NST) fell 0.47% to $9.62.

Technically, last week's rejection from above 7600 followed by the break below the 200-day ma at 7350 this week has created a degree of technical damage to the uptrend. The ASX200 needs to reclaim the 200-day moving average at 7350 to avoid a test of support at 7000/6950.

Source Tradingview. The figures stated are as of April 28th, 2022. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation

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