ASX 200 slips 37 points to 6993 (-0.5%) ahead of the crucial US CPI tonight. Banks held firm with the Big Bank Basket up to $176.88 (0.7%) as CBA delivered and slid slightly lower by 0.3%. NAB rebounded 1.4% on broker comments and ANZ better by 3.4%. MQG backtracked 1.1% with insurers flat. Other financials relatively unchanged. Healthcare slid as CSL fell 1.6%, SHL off 2.9%, and COH down 2.9%. REITS slipped GMG down 2.6% and Industrials slightly weaker, WES down 1.1%, REA off 3.8% and ALL down 1.2%. Tech fell back as Nasdaq woes and CPU results weighed on the sector. XRO fell 3.8% with WTC off 1.4% with heavyweight CPU falling 4.8%. The All–Tech Index fell 2.8%. In the mining sector, a wishy washy start saw buyers return but with no real conviction and slid into the afternoon. BHP down 1.3%, lithium stocks rolling off the top as PLS dropped 0.7% with MIN down 2.0% with LTR up 1.5%. Gold miners dribbled back, and oil and gas stocks eased although coal stocks better. In corporate news, ISU saw a 30c bid, CBA fell 0.3% on a strong result, GNC up 5.1% on an earnings update and MYX sold a business for $680m, rising 4.4%. SBM sold off again by 11.6% after another production cut and A2M dived 6.9% as the US FDA deferred a decision on entry. ACL also eased 7.6% on its results despite seemingly better results. In economic news, the ABS will begin monthly CPI reads from October. Asian markets weaker as Chinese CPI came in below expectation but still at a 2-year high. Japan down 0.2%, China down 0.7% and HK down 2.5%. 10-year yields rose to 3.24%.

Headlines

• Winners: IMU, LKE, CRN, SMR, WHC, GNC, 5EA, MYX
• Losers: SBM, FCL, TPW, CCX, ACL, 360, A2M
• Positive sectors: Banks. Lithium. Coal.
• Negative sectors: Healthcare, Iron ore. Tech. REITs

• High 7030 Low 6986. US CPI expected 8.7%
• Big Bank Basket: Better at 176.88 up 0.7%.  
• All-Tech index: Down 2.8%. CPU stumbles 4.8%
• Gold: Better at $2571
• Bitcoin: Easier to US$22,930
• Aussie Dollar: Down to 69.51c
• 10-Year Yield:  Up to 3.24%.
• Asian markets mixed, Japan down 0.2%, China down 0.7% and HK down 2.5%.
• US Futures: Dow down 36 Nasdaq down 40
• European markets: opening flat across the board. German Inflation in line with expectations at 7.5% July Y/Y.

Major Movers

• MYX +4.41% sells Metrics Contract services for US$475m
• GNC +5.10% upgrades earnings.
• SYA +1.92% rally continues.
• PPM +1.83% rally continues.
• IMU +9.26% first cohort 3 patients dosed in trial of CHECKVACC
• PH2 +26.09% Serome well program and flow testing Sept 2022.
• CTT +12.67% luxury is back.
• IGL +4.13% buying Ovato out of administration.
• RXM +11.43% feeling the copper love.
• WHC +5.12% NHC +3.98% coal in demand.
• SBM -11.57% production down grade.
• A2M -6.85% FDA puts them on ice.
• SLX -6.08% profit taking.
• ACL -7.62% results disappoint.
• CPU -4.83% results underwhelm.
• MP1 -4.89% broker go wishy washy after big rise.
• PAR -7.24% profit taking.
• Speculative Stock of the Day: Iselect (ISU) +75.00% on cash bid from Innovation Holdings Australia at 30c. Meeka Metals (MEK) +34.00% significant new discovery at St Anne’s.

In the News

• Commonwealth Bank (CBA) results: Cash profit $9.60bn beat consensus of $9.43bn and was up 11% on FY21. Net interest margin in line with consensus of 1.90% and down 18bps on FY21. Outlook for NIM unchanged, margins expected to increase in a rising rate environment. Final dividend of $2.10 ahead of consensus of $2.05. Full-year dividend of $3.85c up 10% on FY21. The payout ratio is still behind pre-COVID levels at 68%. The annual report reveals CBA has now written down the value of its stake in Swedish BNPL group Klarna from $2.7bn on June 30, 2021 to $408m as at June 30, 2022.
• Computershare (CPU) report management EPS ($0.58 vs $0.57 expected) and management NPAT ($350.3m vs $344.6m expected) ahead of consensus expectations. Revenue ($2.57bn vs $2.62bn) came in short of expectations, while management EBIT ($530.9m vs $537.8m expected) and management EBITDA ($720.6m vs $724.4m expected) also fell slightly short. The company declared an unfranked 30c dividend, and management guided FY23 EPS to be up around 55% in constant currency terms.
• A2 Milk (A2M) said the FDA is deferring its request to import infant milk formula into the US.
• Dexus Industria REIT (DXI) reports full-year funds from operations (FFO) of 18.46cps, at the top end of its guidance range. Q4 distribution 4.325c vs year-ago 4.3c. Total full-year distribution 17.3c vs guidance of 17.3c.
• IVE Group (IGL) enters into negotiations to acquire parts or all of Ovato Limited. Terms undisclosed.
• GrainCorp (GNC) upgrades guidance, sees full-year underlying profit of $365-400m vs prior guidance $310-370m. Expects another well above average East Coast Australia (ECA) crop in 2022/23.
• Speculation Cleanaway (CWY) could be a takeover target. Macquarie Asset Management, KKR, and Igneo were named as potential suitors.
• Treasury Wine Estates (TWE) – has won a crucial court case in China surrounding the Penfolds brand.

Economic News/Bond Markets

• The Australian Bureau of Statistics plans to release a new monthly CPI indicator in October after a period of consultation. Finally.

Asian Markets

• China’s consumer inflation accelerated in July to the highest level in two years. The consumer price index rose 2.7% last month from a year earlier as pork prices surged 20.2%.

• Producer price inflation, meanwhile, slowed to 4.2% in July from 6.1% in June as commodity prices weakened.

US and European Headlines

• US CPI tonight. 8.7% is the consensus number. Butter up 26% year over year. Packaged bread up 15%. Frozen meals up 23%. Frozen pizza up 18%. Egg prices at grocery stores soaring a whopping 47% in July. Overall food prices are up 14% year over year through July.
• German CPI up 7.5% y/y
• Musk sells US$6.9bn of Tesla shares.
• Domino’s shuts up shop in Italy after failing to win over customers in the home of pizza.
• Finland and Estonia urge EU to stop issuing tourist visas to Russians.
• The U.K.’s energy price cap is set to rise by another 70% in October, pushing energy bills above £3,400 per year and driving millions of households into poverty. More rises expected next year too. Average price by spring next year will top £4,400. Nearly $8000. $670 a month.
• Saxo Bank’s head of macro analysis, Christopher Dembik, said the U.K. is “more and more looking like an emerging market country.” The only thing missing is a currency crisis. Maybe that’s to come!

And finally…..

Clarence

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