ASX 200 drops another 85 points to 6962 (-1.2%) as rates rise and risks grow. Banks bore the brunt of the sell-off with the Big Bank Basket down to $170.77 (2%). CBA down 2.0% and NAB sliding 2.0% as yields pushed towards 3.6%. MQG fell 3.4%, insurers down too, QBE off 1.6% and SUN down 2.2%. Fund managers down too, PDL off 1.7%. Healthcare in ICU as CSL dropped 2.0%, RMD down 2.7% and COH off 2.5%. Industrials in trouble with staples under pressure following the EDV result, falling 12.3% and COL off 3.4%, with BXB dropping 3.5%, REH off 3.4% and REITS sliding, led by GMG, down 2.3%. Telcos eased, tech fell with REA down 2.7%, and WTC and XRO continuing lower. The AllTech Index only modestly lower by 0.9% as ALU sprang to life and saved the day up 19.8%. Resources did their best to hold up but eventually succumbed. BHP remained steadfast, pregnant with a huge dividend. RIO dropped 0.5%, FMG off 0.3% and S32 off 1.4%. Base metals and lithium holding on Chinese stimulus hopes, oil and gas stocks better as Saudi talks production cuts. WDS up 1.9% and STO up 2.3%. Coal stocks remain well bid. WHC up 2.8%. In corporate news, results, results, results, ALU the best of the bunch up 19.8%, ANN bounced 8.6% as the gloves came off, MND doing well too despite staffing issues up 5.9%. KGN fell hard on stuffing up inventory issues down 6.6%, PLS better on good numbers up 3.2% but SSM fell hard on results, off 17.2%, EDV down 12.3% with CCP off 6.1% on customer remediation. In Asia, we saw Japan sag 1.1% on PMI numbers and China flat as stimulus attempts fail to fire. HK down 0.8%. 10-year yields continue to push higher at 3.57%.

Headlines

  • Winners: ALU, ANN, MND, OML, AKE, NEU, ABC, MAD.
  • Losers: SSM, EDV, ACL, TLX, ZIP, CCP, JDO, SGF.
  • Positive sectors: Oil and gas. Gold.
  • Negative sectors: Banks. Financials. Healthcare. Staples. Tech. Telcos.
  • High 7049 Low 6962. Closes on lows.
  • Big Bank Basket: Down to $170.77(1.2%)
  • All-Tech index: Down 0.9%. ALU the saviour.
  • Gold: A little weaker at $2521.
  • Bitcoin: Weaker at US$21248
  • Aussie Dollar: Drifts to 68.59c.
  • 10-Year Yield:  Pushes higher to 3.57%.
  • Asian markets: Japan down 1.1% China flat and HK down 0.8%.
  • US Futures: Dow down 50 Nasdaq down 71
  • Euro sinks on recession fears. Two decade low against the USD.
  • European Markets: Opening weaker.

Major Movers

  • ALU +19.75% results surprise.
  • ANN +8.59% gloves are off
  • MND +5.86% some staffing pressures but good number.
  • AKE +5.28% lithium continues to bubble away.
  • PLS +3.15% numbers please.
  • ABC +4.52% brokers warm slightly.
  • DEG +2.76% becoming a substantial shareholder.
  • CAU +10.94% stirring. One to watch.
  • CU6 +3.57% paediatric neuroblastoma trail advances
  • IVZ +6.45% turns out Mum was right. In newsletter as a buy at 22c.
  • SSM -17.16% results disappoint.
  • EDV -12.33% Dan not the man.
  • SFX -1.18% Derby port access agreement signed.
  • ACL -11.39% ex dividend and a bit more.
  • CCP -6.10% advises of customer remediation.
  • ZIP -6.12% comes undone.
  • JDO -5.84% chopped.
  • KGN -6.58% cut price.
  • CBE -14.88% profit taking.
  • SZL -6.16% loses sizzle.
  • PRL -18.52% clarification on HyEnergy deal.
  • CTT -15.47% tech sell off.
  • Speculative Stock of the Day: BPH +235.71% good volume of hopes for PEP11 rethink after Morrison decision.

In the News

  • ALS (ALQ) expects first-half profit $157-162m vs consensus $153.9m. Issues new 5-year financial targets. Sees FY27 revenue of $3.3bn, +50% vs FY22, EBIT $0.6bn, +55% vs FY22, cash conversion >90% and return on capital employed >20%.
  • ARB Corp. (ARB) full-year profit $122m vs consensus $123.6m. Sales revenue $694.5m vs consensus $702.3m. Final dividend 32c, fully franked. Repeats outlook:Maintains a positive short-term outlook based on strong global sales since the end of FY, a strong customer order book and increasing new car sales in Australia.
  • Kogan.com (KGN) full year adjusted EBITDA $18.9m vs preliminary announcement $19.1m. Revenue $718.5m vs consensus $741.3m. Gross sales $1.18bn, in line with preliminary announcement. No dividend or guidance.
  • Boral (BLD) full-year profit $150m ex-items vs year-ago $251m. Revenue $3.91bn vs year-ago $5.35bn. Achieved a pre-tax gain of $1.03bn for significant items relating to profit on the sale of Boral North America businesses. Outlook revenue to be higher than FY2022.
  • Scentre Group (SCG) first half funds from operations 10.58c vs consensus 10c. Revenue $1.18bn vs year-ago $1.08bn. Interim dividend 7.5c. In FY23, sees funds from operations (FFO) above 19c and a dividend of at least 15c.
  • Endeavour Group (EDV) full-year profit $495m vs consensus $497.6m.Revenue $11.6bn vs consensus $11.65bn. EBIT $924m vs consensus $931.7m. Final dividend 7.7c.
  • Estia Health (EHE) full-year adjusted NPATA $20.4m vs year-ago $23.4m. Adjusted revenue $621.5m vs consensus $664.1m. Occupancy 91.6% vs year-ago 91.2%. No final dividend declared.
  • AMA Group (AMA) full-year normalised EBITDA $21.8m vs guidance $20-22m. In FY23 sees normalised EBITDA of $70-90m vs consensus $70.2m.
  • Breville Group (BRG) full-year EBIT $156.4m vs guidance ~$156m and consensus $156.5m. Revenue $1.42bn vs consensus $1.43bn. Final dividend $0.15.
  • Nanosonics (NAN) full-year profit $3.7m vs consensus -$2.3m. Revenue $120.3m vs consensus $119.1m. In FY23 targeting revenue growth of 20-25%, gross margin of 75-76%.
  • HUB24 (HUB) full-year underlying profit $35.9m vs consensus $32.6m. Revenue $192.5m vs consensus $190.7m. Final dividend 12.5c. Targets FY24 platform FUA $80-89bn vs prior $83-92bn.
  • Pilbara Minerals (PLS) full-year profit $561.8m vs consensus $675.3m. Revenue $1.19bn vs consensus $1.27bn. In FY23 expects spodumene concentrate production of 540-580Kdmt and unit operating cost between $635-700/dmt.
  • Monadelphous Group (MND) full-year underlying profit $52.2m vs consensus $47.2m. Revenue $1.93bn vs consensus $1.85bn. Final dividend 25c, full franked. Construction activity expected to ramp up over FY23 and beyond added labour shortage most significant challenge. FY23 revenue dependent on timing and commencement of awards, likely skewed to H2. Notes strong balance sheet to support acquisition opportunities.
  • Ansell (ANN) full-year adjusted EPS US$1.386 vs consensus US$1.26. Revenue US$1.95bn vs consensus US$1.99bn. Full year dividend US$0.5545 vs consensus US$0.52. Second half dividend of US$0.312. In FY23 expects EPS between US$1.15-1.35/share. SG&A costs forecast to increase due to reversal of lower variable employee costs in FY22. Currency expected to have a ~US$32m adverse impact on EBIT.

Economic News/Bond Markets

  • S&P Global Australia PMI for August: Manufacturing: 54.5 vs prior 55.7. Services 49.6 vs prior: 50.9. A reading below 50 indicates a contraction in activity.
  • T. Rowe Price’s asset allocation committee has moved its Australian equities rating to ‘neutral’ from ‘overweight’ noting the continuing deterioration of macroeconomic indicators amid rising domestic and global recession risks.
  • Weekly ANZ Roy Morgan consumer confidence improved 1.7% to 85.6 points. Remains below the neutral 100 level.

Asian Markets

  • Japan PMI Manufacturing dropped from 52.1 to 51.0 in August, below expectation of 51.8. PMI Manufacturing Output dropped from 49.7 to 48.3. That’s also the lowest level in 19 months. PMI Services dropped from 50.3 to 49.2, first contraction since March. PMI Composite dropped from 50.2 to 48.9, first contraction since February.
  • Hundreds evacuated as forest fires blaze in China’s drought-hit Chongqing.
  • China’s National Health Commission said Covid-19 has contributed to the decline in the country’s marriage and birth rates. The Chinese National Energy Administration acknowledged supply challenges caused by high temperatures and a lack of hydroelectricity generation with a promise to fix it by 2025.

US and European Headlines

  • Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said “extreme” volatility and lack of liquidity mean the futures market is increasingly disconnected from fundamentals and OPEC+ may be forced to cut production.
  • Citi economists believe UK inflation will hit 18% next year. Eeyore has a problem. UK is fast becoming a submerging market. Some suggest rates will have to go to 7%.
  • Olaf Scholtz in Canada to plead for gas.
  • Israel raises rates by the most in twenty years to 2% to combat inflation at over 5%.
  • Adidas CEO resigns unexpectedly.
  • Coal-rich Poland laments reliance on Russia as home supplies run short.
  • Italian 10-year yields 4.56%. Election beckons.

And finally…

Clarence

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