Wednesday 26th October – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

ASX 200 closed up 12 points to 6811 (+0.2%) as caution crept in following worse-than-expected CPI numbers.7.3% is a big number and has sent economists to the models ahead of the RBA next week. A solid opening saw sellers take a few profits. Maybe time to consolidate. Bank results start tomorrow, the sector remains strong with the Big Bank Basket up to $183.92 (+0.3%). CBA up 0.2% and ANZ up 0.5% ahead of its numbers tomorrow. MQG rose 0.6% ahead of results tomorrow. QBE up 1.2%, IAG down 0.6% and ASX up 0.1%. MPL returned to trade falling 18.1% after its cyber attack update. Healthcare mixed, CSL slipped 0.3% with RHC and SHL slightly better. Industrials mixed, TLSDA up 0.5%, TCL up 1.7% with WES continuing to struggle down 0.5%. WOW, EDV and COL all lost ground yet again on inflation woes. Tech eased with the All-Tech Index unchanged. Resources mixed, some profit taking in lithium stocks as PLS fell 7.1% as brokers moved to take profits. AKE also eased 4.2% with others in the second tier under pressure too. Gold miners better, NCM up 1.6% with iron ore miners falling away, BHP up 0.1% and FMG down 0.8%. Selected base metal stocks doing ok, IGO up 3.3% and S32 up 1.1%. Energy stocks eased, WDS down 1.1% and STO off 0.7% with WHC down 8.1% after announcing yet another on-market share buyback. In corporate news, CDA tumbled 20.7% on its AGM update, CGC rose 10.8% on private equity taking a stake. BOE up 4.7% on its quarterly report. ELO saw plenty of Mr Blue Sky with a 485c bid from K1, rising 40.3%. WGX rose 8.0% on bonanza grade results. In economic news, it was all about the 7.3% inflation rate. Over to you RBA. Asian markets continue to recover from Black Monday. 10-year yields dropping below 4%. Dow futures down 87 points.

HEADLINES

Winners: CGC, SGF, VUL, GUD, RMS, BOE, NUF, EHE
Losers: CDA, MPL, WHC, PLS, NHC, VAU, TER, JRV.
Positive sectors: Banks. Financials. Base metals.
Negative sectors: Staples. Energy. Coal. Lithium.
High 6843 Low 6801 Narrow range considering.
Oil prices slipping slightly in Asia.
Big Bank Basket: Closed up to $183.33(0.3%)
All-Tech index: Unchanged.
Gold: Falls to $2585
Bitcoin: Higher at US$20,264
Aussie Dollar: Better at 64.09c
10-Year Yield: Lower at 3.95%
Asian markets: Japan up 0.7%, HK up 2.2% and China up 1.1%
US Futures: Dow down 100 Nasdaq down 232 on Microsoft and Google results.
European markets opening slightly higher.Bank results cheer. Deutsche opening up around 2.5%. Mercedes upgrading outlook.

MAJOR MOVERS

CGC +10.76% Paine Schwartz share acquisition. Seeks board seat but no takeover.
EHE +4.35% Jarden investor conference presentations.
CUV +3.91% results of AGM.
RMS +4.80% quarterly report.
ELO +40.30% recommended proposal from K1.
ASM +14.98% quarterly report.
EUR +7.78% merger with Nasdaq company.
TNT +14.29% cyber security back on buyers list.
CDA -20.70% AGM report
MPL -18.12% hacked and business update.
WHC -8.11% another buyback announced.
PLS -7.09% profit taking.
FLN -10.42% business update.
IVZ -6.90% drilling update.
AVJ -8.05% no longer a proud old builder.
CAU -6.25% withdrawal of shareholder presentation.
Speculative Stock of the Day: Wa1 Resources (WA1) +418.52% good volume on announcement of a discovery of mineralised carbonatite at West Arunta. 54m at 0.62% Nb2O5, 0.18% TREO2, 3.85% P2O5.

IN THE NEWS

CSR (CSR) – According to The Australian, CSR is said to be preparing an offer for Jeld-Wen, it is not yet clear whether the bid is for the entire company or just the Australasian business.
Iluka Resources (ILU) – has entered into an agreement with Northern Minerals (NTU) for the supply of rare earth minerals. The company stated in the release, “The agreement is for the supply of all available concentrate from Northern’s Browns Range project until the delivery of contained rare earth oxide (REO) has reached 30.5kt”. NTU has also proposed a $5m share purchase plan at $0.04 per share, in order to fund the Browns Range project.
Mount Gibson Iron (MGX) – Has reaffirmed FY23 guidance, stating high-grade iron ore mining continues to increase, 38% greater than the previous quarter. Repairs on the processing plant caused by fire have proceeded ahead of initial expectations, allowing for the build-up of significant stockpiles (approximately 0.5 million wet metric tonnes). Currently maintain $60 million in cash and investment reserves.
GrowthPoint (GOZ) – Maintains FY23 Guidance as the weighted average lease expiry continues at 6.3 years. Completed the acquisition of Fortius Funds Management.
Mirvac (MGR) – Has today released their quarterly operational update for FY23, stating an approximate increase in pre-sales to $1.7 billion, over 415 residential properties. Total occupancy rates have increased to 97.6% this quarter from 96.8% in the previous corresponding quarter.
Mineral Resources (MIN) – Released in today’s quarterly activities report was a decrease in iron ore shipments by 3% to 4.5 million wet metric tonnes from the previous quarter, this was accompanied by an average iron ore price was 15% lower than the last quarter. Spodumene concentrate production increased to 82k dmt up 14% from the previous quarter due to the increased production at the Wodgina Mine.
Coles Group (COL) – Reported in today’s results release, Group sales revenue has increased by 1.3% from the previous corresponding quarter. Supermarkets have seen an increase in revenue to $8.8bn, a 1.6% increase from the PCP, while liquor sales decreased 4.3% in the same period to $836m. Coles also notes that inflation has increased significantly across the quarter.
Kogan.com (KGN) – Has announced that gross sales have declined 38.8% year on year to $202.3m. During the same period group, active customers declined 12.3% and gross profit declined 40.4% to $31.4m.
Tabcorp (TAH) – group revenue for the first quarter of financial 2023 rose 18.7% year-on-year. Its guidance for cost growth is unchanged at 3% to 4%, skewed to the first-half.

ECONOMIC NEWS/ BOND MARKETS

Analysts from S&P Global Ratings and Moody’s Investor Services said Tuesday’s budget supported Australia’s rating remaining AAA-stable.

CPI Number

The Consumer Price Index (CPI) rose 1.8% this quarter.

Over the twelve months to the September 2022 quarter, the CPI rose 7.3%.
The most significant price rises were New dwelling purchases by owner-occupiers (+3.7%), Gas and other household fuels (+10.9%) and Furniture (+6.6%).

Talk now shifting to RBA on Tuesday. 40bos rise now starting to gather some followers. Not sure how the RBA can fight food inflation from floods etc with rate rises.

The Future Fund’s assets slipped by $1.25bn to $193bn during the September quarter. Over the 12 months to September, its assets had slipped 3% compared to an 8% fall in the S&P/ASX 200 index.
Commonwealth Bank expects a further 25bps rate increase at the RBA’s December meeting, taking the cash rate to 3.1%. Analysts say a 50bps lift in November is possible but believes the RBA will prefer to increase rates more frequently over shifting back to larger bumps.

ASIAN MARKETS

Chinese stocks in Hong Kong extended their rebound from the historic rout earlier this week. The Hang Seng China Enterprises Index rose as much as 2.6%, adding to its 1.3% gain from the previous session.

SK Hynix slashes capex after profits plunge.
IEA Executive Director Fatih Birol warned emerging and developing countries are most vulnerable to soaring energy prices. Birol said those who will be hit hardest include oil-importing nations in Africa, Asia and Latin America because of higher import prices and their weaker currencies.

US AND EUROPEAN HEADLINES

Musk signals US$44bn Twitter deal on track to close this week.
West Texas gas price falls below zero as pipeline outages trap supply
Adidas ends tie-up with Kanye West after anti-Semitic remarks
European bank results in focus. BMW looking to upgrade outlook. Deutsche Bank set to rally.

And finally