ASX 200 slips 22 points to 7468 (-0.3%) on higher-than-expected CPI. Turnaround from solid open as CPI came in above expectation at 7.8% highest since 1990. Resources slid a little with BHP off 1.0% and RIO down 0.7% with quarterlies dominating and gold miners sliding lower. SBM collapsed on quarterly down 21.4%, lithium slightly better in places, IGO up 0.3% and MIN falling 2.2% on delays at Mt Marion. Energy stocks slipped, WDS off 1.2% despite record production numbers, STO down 1.6% and WHC off 1,4%. Banks better on higher yields, CBA up 0.7% and NAB better by 0.5%. The Big Bank Basket up to $188.58. MQG better and insurance stocks gaining on yields. QBE up 1.0%. REITs slipped with GMG down 0.7% and SCG off 1.0%. Tech down, WTC unchanged on an acquisition. XRO under pressure down 2.8% and the All–Tech Index down 1.3%. Healthcare down too, CSL off 0.6% and RHC off 1.0%. In corporate news, NWS and Fox will not be merging, ALX down 0.2% on pre-CV19 trends, US lithium company Albemarle lifts lithium demand by nearly 15%. In economic news, CPI up 7.8% in highest jump since 1990. Analysts go back to the drawing board with 40bps suggested by some in Feb. Asian markets still celebrating Lunar New Year although Japan up 0.5%. 10-year yields up to 3.50%. Dow futures down 89 points. NASDAQ futures down 92 points.

HEADLINES

  • Winners: AX1, STA, TUA, NWS, LLL, MYR, MND
  • Losers: SBM, CTT, WAF, OFX, GMD, ZIP, EVN
  • Positive sectors: Banks. Financials. Lithium.
  • Negative sectors: Iron ore. Oil and gas. REITs. Tech.
  • High 7507 Low 7453 Narrow range again.
  • Big Bank Basket: Closed steady at $188.58
  • All-Tech index: Off 1.3%
  • Gold heads lower to $2716
  • Bitcoin: Off highs at US$22628
  • Aussie Dollar: Cracks 71.02c on higher CPI.
  • 10-Year Yield: Rallies to 3.52%
  • Asian markets: Japan up 0.5%. Lunar New Year closes other markets.
  • US Futures: Dow down 93 Nasdaq down 92.

MAJOR MOVERS

  • AX1 +10.18% trading update.
  • ARU +4.72% completion of second tranche of placement.
  • MYR +5.59% the update brings upgrades.
  • LLL +6.03% broker chatter.
  • ASN +31.58% western strategy resource expansion.
  • ATC +17.65% Go Iggy. Update on CERENERGY battery project.
  • WR1 +18.11% sure do. Pegmatite extension.
  • NCZ +14.53% Mt Lyell video presentation.
  • SWM +2.27% popped up.
  • SBM – 21.35% shocker.
  • DRO -9.52% profit taking.
  • SZL -5.11% sellers back.
  • MHJ -5.29% brokers cool
  • SBM -21.35% quarterly disappoints. And some.
  • CTT -8.59% bouncing around.
  • WBT -5.58% quarterly report shows long way to go.
  • ZIP -6.38% sliding back again. SOP.
  • MCR -5.14% POS -4.55% nickel stocks under pressure.
  • Speculative Stock of the Day (So Far) – Sky Metals (SKY) +34% Large scale rare earth mineralisation at Doradilla.
  • Above Average Volumes: SKY, LBY, PTG, NKL, MOZ, WLD

COMPANY NEWS

  • Mineral Resources (MIN) Highlights steady production volumes in Mining Services but also shows a 9% decrease in iron ore shipment and delays in the Mt Marion expansion project resulting in reduced guidance and increased cost. The company also announced an off-market scrip takeover bid for Norwest Energy (NWE) and reached an agreement.
  • West African Resources Limited (WAF) achieves 2022 guidance with annual gold production of 229,224oz at ASIC of US$1,086/oz, with Q4 production of 49,807oz at ASIC of US$1,286/oz which is a significant result considering the political challenges encountered in Burkina Faso in 2022 and ongoing inflationary cost pressures.
  • AMP Limited (AMP) announces it expects to recognize impairment charges of A$68m (post-tax) in its FY22 financial results. These impairments will reduce the statutory profit but will not impact the underlying Net Profit After Tax (NPAT).
  • Insignia Financial LTD (IFL) provides a quarterly update. FUA is down $6.9bn and FUA down by $200m over the quarter. Insignia has entered into a binding share sale agreement to divest its 45% stake in JANA to JANA management. Sale of Australian Executor Trustee Limited business completed.
  • Alkane Resources Limited (ALK) exceeded its forecast for gold production in the quarter, with 18,301oz produced, and reported cash and listed investments totalling $119.6m. FY23 guidance for Tomingley gold production has increased to 62,000oz to 70,000oz as per the ASX announcement on January 5.
  • WiseTech (WTC) announced a $326m deal to acquire logistics software company Envase. The acquisition will extend and strengthen WiseTech’s position in one of its six key CargoWise development priority areas.
  • News Corp (NWS) – Rupert Murdoch has decided to abandon the proposed merger between Fox and News Corp. According to the company, Murdoch and his son have determined that a merger is not the best option for the shareholders of News Corp and Fox at this present time
  • Microsoft’s shares up 4.1% in after-hours trading after the company beat the market’s earnings and revenue expectations, with earnings per share at $2.32 compared to the consensus of $2.29. The company says the positive results are from its commercial offerings in the Microsoft Cloud, which generated revenue of $27.1bn, up 22% year-over-year.
  • Neometals Ltd (NMT) has signed a non-binding term sheet to explore opportunities for Australian Vanadium Ltd (AVL) to process co-product vanadium concentrate from NMT’s Barrambie Project and to co-locate or share non-process infrastructure near AVL’s proposed Tenindewa processing plant site.
  • Woodside Energy (WDS) reported record oil production of 51.6m barrels equivalent (boe) for the December quarter, up 0.7% from the prior quarter. The result lifted output for the calendar 2022 to 157.7m boe, surpassing guidance and marking the highest annual production in Woodside’s history.
  • Accent Group (AX1) reported sales of $825m for the 27 weeks ended January 1, a 39% increase. Accent expects to report EBIT between $90m and $92m for the first half.
  • Metals X Limited (MLX) reports Q2 tin production up 1,925 vs 1,848 last quarter, imputed EBITDA at $16.3m down from last quarter’s $17.3m, and closing cash and cash equivalents decreased by $3.6m to $113.9m.
  • OZ Minerals Limited (OZL) reports progress on study program drilling under Curnamona Province Alliance. 37 reverse circulation percussion drill holes have been completed for a total of ~6,772 metres on 4 copper prospects including Johnson Dam, Deep Well, Main Dome NW, and Kalkaroo West prospects. Havilah and Oz Minerals agree to a 69-day extension due to unavoidable delays caused by unseasonably heavy rain.
  • St Barbara Limited (SBM) reports gold production for Q2 was 60,976 on track to reach bottom end of group production and top end of cost guidance. Merger announced with Genesis to form Hoover House and demerger of non-Leonora assets to form Phoenician Metals CEO Dan Lougher said “… I believe that this will deliver the best pathway forward for our shareholders by helping to unlock the market value of Atlantic and Simberi while driving the consolidation of the Leonora region”.

ECONOMIC & OTHER NEWS

Australian CPI – Annual CPI inflation the highest since 1990

  • Morgan Stanley has updated its forecast for dividends paid by big banks in 2023 and expects Commonwealth Bank to post the biggest lift. The bank forecasted an average dividend per share growth of ~9% in 2023.
  • New Zealand’s CPI rose faster than expected in the December quarter, with an increase of 1.4% versus forecasts of 1.3%. On an annual basis, CPI grew 7.2%, which is below the Reserve Bank of New Zealand’s expectations but still incentivises the Reserve Bank to increase rates.

ASIAN MARKETS

  • Japan’s broken bond market continued to throw up anomalies with central bank ownership of some government debt exceeding the amount outstanding, according to its latest data. Is that weird?

US AND EUROPEAN HEADLINES

  • Microsoft eased back after saying revenue growth in its Azure cloud-computing business will decelerate in the current period and warned of a further slowdown in corporate software sales.
  • Germany and US set to send Leopard battle tanks to Ukraine.
  • Murdoch scraps merger of Fox and Newscorp after investor pushback.
  • Classified documents are now found at Mike Pence’s home.
  • Google cuts massage therapists in California.
  • JPMorgan’s Marko Kolanovic is abstaining from the early 2023 rally. He is bracing for as 10% or more correction in the first half of 2023.
  • Doomsday Clock –  The 2023 countdown time was set at “90 seconds to midnight.” The clock’s threats “focus on manmade threats: nuclear risk, climate change and new disruptive technologies, including biotechnologies.”
  • Double demerit points for five days. Drive safe.

And finally….

Clarence

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