ASX Large Caps: ASX closes flat after losing ground and weighed down by miners

ASX closes flat as miners weigh on market as energy stocks lead winners
Chemist Warehouse plans to list on the ASX via a merger with Sigma Healthcare
Ausbil Investment Management says economy in early stages of normalisation

It has been a topsy-turvy start to the week for the local bourse today, starting stronger with an early surge in info tech helping build momentum but losing ground throughout day weighed down by the mining sector.

The benchmark S&P ASX 200 earlier hit a three-month hight of 7226.8 on the back of gains on Wall Street on Friday, firming commodity prices, especially in the energy sector with the exception of natural gas.

However, at close the benchmark was flat and up just 4.1 points or 0.06% to close at 7199 points.

There was mixed news from the world’s biggest economy last week with positive inflation and interest rates data nudged investors towards believing there could be an interest rate cut coming in March.

However, a US Dept of Labor report shows that non-farm payroll increased by 190,000 in November, above estimates of 180,000 and US unemployment dropped to 3.7%, alongside a 0.4% in average earnings on a monthly basis, having some pundits now forecasting rate cuts could be pushed back to May.

Ausbil Investment Management co-founder, executive chairman and CIO Paul Xiradis says heading into 2024, the economy is now in the early stages of normalisation.

He says while there is much geopolitical risk, the global economy is on an upward path, and is expected to grow by 3.2% in 2024 on Ausbil’s forecasts.

“Australia’s advantage in global resources places it well ahead of other developed economies in supporting activity and avoiding a recession,” he says.

Ausbil forecasts Australian GDP growth of 1.75% in 2024 with Xiradis saying unemployment, record levels of household savings, strong terms of trade, structural support for commodity prices, and net migration all support this view.

“However, we believe earnings growth will be harder to find and we view earnings growth stabilising into FY24,” he says.

“There is room for some upward surprise in certain sectors as Australia’s economy remains relatively resilient and is operating near full employment.”

In other big news on the market today pharmaceutical distributor and Amcal owner Sigma Healthcare (ASX:SIG) has confirmed it has entered into a merger implementation agreement (MIA) to merge with CW Group Holdings Limited (CWG or Chemist Warehouse Group).

The company will acquire the pharmacy giant through a cash-and-scrip deal with CWG shareholders receiving $700 million in cash combined with SIG shares, leading to their ownership of 85.75% of the merged entity (MergeCo), pending various approvals, including that from the competition regulator ACCC.

SIG shareholders will hold the remaining 14.25% in the reverse listing deal. A new $1 billion debt facility with NAB and ANZ has been established for SIG to fund the cash consideration required under the proposed merger.

BIG CAP WINNERS

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Code Name Price % Change Volume Market Cap SIQ Smartgroup Corporation 8.95 7% 989,729 $1,106,529,453 MFG Magellan Financial Group 8.71 4% 900,434 $1,522,500,153 CEN Contact Energy Ltd 7.335 3% 6,115 $1,804,732,799 MEZ Meridian Energy 4.98 3% 41,430 $6,102,479,423 BPT Beach Energy Limited 1.5375 3% 5,545,394 $3,399,187,147 FRW Freightways Group Lt 7.57 3% 158 $1,311,752,091 LOV Lovisa Holdings Ltd 21.165 3% 247,141 $2,260,765,290 PDN Paladin Energy Ltd 0.96 3% 16,973,006 $2,789,456,123 LIC Lifestyle Communities 17.76 3% 80,014 $1,808,630,766 GUD G.U.D. Holdings 11.575 3% 128,125 $1,589,292,171 SUL Super Retail Group 14.94 2% 308,590 $3,299,325,165 APE Eagers Automotive 13.92 2% 164,807 $3,498,983,584 EVT EVT Limited 11.83 2% 110,012 $1,879,148,634 ZIM Zimplats Holding Ltd 21.88 2% 8,405 $2,306,674,818

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Smartgroup Corporation (ASX:SIQ) has announced its landed a contract with the SA Government, with its subsidiary Smartsalary set to step in as exclusive administrator of salary packaging services and novated leasing services under an initial five-year agreement.

Smartgroup has also revealed its outlook for the year, expecting to reach revenue of ~$249 million, driven largely by what the company says is strong growth in novated leases.

With energy the winning sector today Contact Energy (ASX:CEN),Meridian (ASX:MEZ), Beach Energy (ASX:BPT) and Paladin Energy (ASX:PDN) are all up today.

BIG CAP LOSERS

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Code Name Price % Change Volume Market Cap SGR The Star Entertainment Group 0.4775 -8% 36,789,521 $1,491,714,056 BGL Bellevue Gold Ltd 1.6925 -7% 3,093,390 $2,085,445,102 PRN Perenti Limited 1.0475 -5% 6,490,133 $1,058,025,440 DEG De Grey Mining 1.2675 -5% 4,863,987 $2,471,368,171 LFG Liberty Fin Group 3.91 -4% 4,547 $1,239,519,802 WGX Westgold Resources. 2.115 -4% 1,217,658 $1,041,970,006 MAD Mader Group Limited 6.73 -4% 32,865 $1,400,000,000 IRE IRESS Limited 7.85 -4% 732,176 $1,520,466,318 CGC Costa Group Holdings 2.98 -3% 3,221,277 $1,431,306,162 SNZ Summerset Group 8.7 -3% 240 $2,106,189,624 AWC Alumina Limited 0.785 -3% 4,851,848 $2,350,361,948 GOR Gold Road Res Ltd 1.8775 -3% 1,318,076 $2,092,124,399 PLS Pilbara Minerals 3.6 -3% 36,601,752 $11,165,126,076

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Investors have reacted to a financial trading update for global mining services company Perenti Global (ASX:PRN) which will see it going into 2024 with higher debt than previously indicated.

The update comes after PRN in October completed the acquisition of rival drilling contractor DDH1 in October.

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