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Market wraps 7th February 2023

Closing Bell - Grady Wulff

The RBA today announced the nation’s cash rate will increase by 0.25% or 25 basis points, to 3.35% in a move widely expected by the markets. RBA governor Philip Lowe said ‘global inflation remains very high’ and warned further rate hikes will be needed in coming months to bring inflation back to the target range.

The ASX tanked immediately after the announcement following warnings from Philip Lowe that further rate hikes are needed in coming months, despite the rate hike today meeting market expectations, which saw the usual rate-hike sensitive suspects including REIT stocks sold off post the announcement as investors anticipate further impact to REIT stock balance sheets on the back of this next interest rate hike.

For the day though, the key index ended the session down 0.46%. Hot takeover target Nitro Software (ASX:NTO) received a proposal from Potentia Capital to engage with Nitro in relation to gaining access to due diligence, with a view to potentially increase its current $2/Nitro share off-market takeover offer to the range of $2.20 to $2.30 per share. Nitro shareholders are cautioned that there is no certainty Potentia will increase its offer for the Nitro takeover, and the current $2/share bid from Potentia is inferior to the Alludo takeover offer of $2.15/share that is set to expire on 3rd March. The Nitro board is currently seeking advice from its external financial and legal advisors.

Nuix (ASX:NXL) skyrocketed 40% today after the investigative analytics and intelligence software company announced the Federal Court of Australia has delivered its judgement in relation to the proceedings brought by former Nuix boss, Edward Sheehy against Nuix. The Federal Court this morning dismissed Mr Sheehy’s claims and said there is no requirement for Nuix to amend its options register and that Mr Sheehy is not entitled to any monetary compensation from the company. The initial claims Mr Sheehy made were him being owed options and entitlement of shares to the value of $183m plus interest, which today was dismissed.

The winning stocks today were led by New Hope Corporation (ASX:NHC) rallying 3.70%, Link Administration (ASX:LNK) adding 3.43% and Magellan Financial Group (ASX:MFG) ending the day up 3.36%.

And on the losing end ARB Corp (ASX:ARB) tanked more than 12% after Macquarie responded to the companies half year trading update, downgrading ARB to neutral. Lifestyle Communities (ASX:LIC) fell 5.7% today and Centuria Capital (ASX:CNI) lost 5.58%.

The most traded stocks by Bell Direct clients today were Newcrest Mining (ASX:NCM), Telix Pharmaceuticals (ASX:TLX) and New Hope Corporation (ASX:NHC).

Australia’s trade balance data for December was also released today, showing the country’s trade surplus declined to $12.237bn for the month, down from $13.475bn in November. The trade surplus decline was larger than economists were expecting and mainly driven by surging cost pressures on exports against imports growing amid China’s easing of tough COVID restrictions. Exports for the month fell 1.4% from November, while imports rose 1% from November. Overall, Australia posted its fifth straight year of trade surplus buoyed by robust sales of key commodities like iron ore and natural gas.

Taking a look at commodities, oil is trading almost 1% higher at US$74.78/barrel, gold is up 0.32% at US$1873.11/ounce and iron ore is down 0.8% at US$125.50/tonne.