The ASX 200 closed down 63 points to 6700 (-0.9%). The market made a small recovery through the second half of the session but still finished in the red. Institutional portfolio rebalancing as we approach the end of the quarter a feature. Financials, consumer staples and energy were the only sectors that finished in positive territory. Energy names outperformed ahead of an OPEC + meeting tonight. Major producers Saudi Arabia and the United Arab Emirates look unlikely to be able to boost output significantly which is good news for the oil price. Not so good for taming inflation. Woodside (WDS) up 0.4% and Santos (STO) down 0.5%. Property and technology names led the market lower. The property sector was held back by a lot of companies trading ex-distribution. Transurban (TCL) also ex-dividend, down 0.8%. Telstra (TLS) off 1% and Macquarie Telecom (MAQ) down 1.8% despite a guidance upgrade. Liontown (LTR) up 5.2% on the back of an offtake deal with Ford. Pilbara (PLS) was down 3.8% despite lifting production guidance and lithium price forecasts. Tyro (TYR) off 16.7% as the CEO stepped down. BWX (BWX) was downgraded to neutral from buy at Citi. BNPL names fell on soft US consumer data. Block (SQ2) down 6.2%, Zip Co (ZIP) down 4.2%. ZIP now down ~95% in the last year to a six-year low. Retail sales up 0.9% in May ahead of consensus and hitting another record level according to the ABS. The rise was driven by department stores and cafes. Jerome Powell is attending an economic policy panel discussion tonight. The US also has a GDP number out but as it is the third release, it is unlikely to move the needle. Dow futures are up 42 points.

Headlines

  • Winners: SWM, ERA, LTR, VRT, MIR, SGR, AZJ.
  • Losers: IMU, SDR, CAR, LLL, NEA, SYR, SLR, RED.
  • Positive sectors: Banks.
  • Negative sectors: Healthcare. Iron ore miners. Gold. Lithium. Tech. Industrials.
  • High 6750 Low 6666. Devil of a low.
  • Big Bank Basket: Steady at $163.64
  • All-Tech index: Down 3.8%.
  • Gold: Drifts to $2627
  • Bitcoin: Drifting around at US$20842
  • Aussie Dollar: Eases to 68.89c
  • 10-Year Yield Eases to 3.71%.
  • Asian markets: Japan down 0.7%. HK down 1.8% China down 0.8%
  • US Futures: Dow up 42 Nasdaq up 17 – European markets opening slightly down.

Major Movers

  • LTR +5.16% new offtake and FID.
  • SWM +6.17% some window dressing perhaps.
  • SGR +3.32% New CEO from TYR.
  • WBT +5.12% update on ReRam demo chip.
  • ERA +5.41% no sign of equity raise.
  • AZJ +3.17% becoming a substantial holder.
  • VRT +4.01% offer free from conditions.
  • DGL +2.95% delisting from NZ
  • IMU -13.95% profit taking continues.
  • LLL -9.17% roar turns to whimper.
  • SYA -8.57% profit taking after big rose yesterday.
  • CAR -9.55% US acquisition and entitlement.
  • SLR -8.15% buy-back update.
  • EOS -25.97% placement at 120c.
  • TYR -16.67% CEO leaves to join SGR.
  • TNT -4.17% blows up.
  • Speculative Stock of the Day: Absolutely no volume in anything today. Sign of the times.

In the News

  • Pilbara Minerals (PLS) – June quarter production numbers: Estimated shipments of ~127-132K dmt vs quarter-ago 58,383dmt. Total shipments for FY22 expected to be in the range of 355-360K dmt vs FY21 281,440dmt. Approves P680 project to deliver a further 100,000tpa of production capacity from Pilgangoora operation.
  • Bega Cheese (BGA) appoints CFO Pete Findlay as COO, effective after FY report.
  • Liontown Resources (LTR) executes binding offtake agreement with Ford to supply spodumene concentrate from Kathleen Valley project. Makes FID to approve development of Kathleen Valley Lithium Project
  • Insurance Australia Group (IAG) receives regulatory approval for sale of interest in Malaysia.
  • Macquarie Telecom Group (MAQ) full-year EBITDA towards the higher end of the previously announced $85-88m range.
  • Downer (DOW) – announced that the Djilang Alliance it is part of, has been awarded a contract by Rail Projects Victoria to deliver the South Geelong to Waurn Ponds duplication project as part of the Regional Rail Revival program. The alliance contract will generate revenue to Downer of about $270m.
  • Select Harvest (SHV) – warned its 2023 crop pollination is at risk if the emergence of varroa mite dangerous to European honeybees cannot be successfully eradicated. 9% of its orchards, which are in NSW, are affected by the standstill order and a further 11% rely on NSW hives. No fly zones imposed.

Economic News/Bond Markets

  • Australian retail turnover rose 0.9% in May 2022, reaching another record level, according to the Retail Trade figures released today by the ABS.
  • Morgan Stanley downgraded earnings across the listed property sector by 8% to 10% on average.

Asian Markets

  • Chinese businesses ranging from services to manufacturing reported a slowdown in the second quarter from the first, reflecting the prolonged impact of Covid controls. That’s according to the U.S.-based China Beige Book. Between the first and second quarters, hiring declined across all manufacturing sectors except for food and beverage processing, according to report.
  • Shanghai Disneyland is set to reopen this week with limited capacity and enhanced health and safety protocols.
  • BYD, the Chinese EV company, is up 66% since the March low and on the verge of becoming a trillion-yuan company.

US and European Headlines

  • Wall Street heading for its worst first half since 1970.
  • NATO talkfest kicks off today in Sintra.Finland and Sweden poised to join NATO after Turkey drops veto.
  • ECB Chief Economist Philip Lane said the Frankfurt institution will have to remain vigilant over the coming months with the prospect of inflation spiralling ever higher. The ECB in June forecast a GDP rate of 2.8% for the euro zone this year.
  • Hedge fund manager Jim Chanos’ next ‘big short’ is data centres.
  • Disney board renews chief executive Chapek’s contract for 3 years.
  • Tesla is closing its office in San Mateo, California, where employees worked on improving the company’s driver assistance systems.

And finally……

Clarence

XXX