Tuesday 6th June – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

ASX 200 closed down 87 points to 7130 (-1.2%) following a 25bps rate hike by the RBA, propping up the Aussie dollar 0.8% to 66.67c. Consumer discretionary hit hardest following rate hike news, as retail woes weighed on the market. HVN -3.2%, ADH -6.8%, and JBH off 1.8%. Banks hurting today, the Big Bank Basket down to $165.40 (-1.2%). CBA -1.0%, WBC -2.1%, ANZ -1.6%, NAB -1.1%. Insurers and Healthcare broadly down. REITs also getting hit as bond yields rise, GMG down 1.1%, and MGR off 0.4%. Resources down as iron ore dropped, BHP down 0.9%, and FMG dropped 0.2%. Lithium stocks mixed, PLS up 2.0% while MIN fell 1.2% as Morgans released their report on the sector. Gold miners drifting lower despite the possibility of a halt in Fed rate hikes. NST down 0.5%, and NCM down 2.7%. In corporate news, QAN -4.1% as CEO Alan Joyce discloses sales of 2.5m shares, SIG +22.1% after signing a five-year supply contract with Chemist Warehouse, BBN -16.9% on downgraded profit guidance, ASX off 10.2% after its unveiling of their new five-year strategy, while SM1 rose 14.8% on A2M partnership news. In economic news, the RBA raised interest rates by another 25bps as inflation is proving to be sticky. Asian markets mixed, Japan up 0.7%, HK up 0.3% with China down 0.5%. Australia’s 10Y yield hit a 13-week high during trade before closing to 3.80%. Bitcoin down 0.77%. Dow Jones futures down 27 points, and Nasdaq futures down 7 points.

HIGHLIGHTS

Winners: SIG, A4N, WBT, DYL, VUL, WHC, PRN
Losers: EBO, ASX, WGX, BRN, AX1, DHG, IMU
Positive sectors: Nothing.
Negative sectors: Everything.
High 7205 Low 7126 RBA raises rates 25bps.
Big Bank Basket: Falls to $165.40(-1.2%)
All-Tech index: Down 1.0%
Gold Lower at $2940
Bitcoin: Falls to US$25778
Aussie Dollar: Pushes to 66.62c.
10-Year Yield: Jumps to 3.81% on RBA
Asian markets: Mixed Japan up 0.7% and HK up 0.3% with China down 0.5%
US Futures: Dow down 27 Nasdaq down 7.

MAJOR MOVERS

DYL +5.9% Uranium sector move.
SMN +23.21% discussions with Boeing.
PRN +4.3% guidance upgrade.
WHC +4.4% NHC +3.5% coal movers.
A4N +12.3% receipt of $1.6m R&D tax incentive.
NEU +4.2% bounces back.
WBT +6.0% back in favour.
AX1 -6.8% retail under serious pressure.
BRN -8.7% profit taking.
ASX -10.2% CHESS pushed out to 2032 as costs blow out on 5-year plan.
EBO -12.3% loses Chemist Warehouse contract.
BBN -16.6% wakes up screaming. Business update.Drags retail sector down.
WGX -10.0% bids for MGV.
APX -5.4% profit taking.
COE -3.5% production guidance.
WA1 -8.9% profit taking.
ELD -3.8% Clarence Beeks (ABARE) publishes crop report.
PNV -2.7% trading halt.
DHG -5.6% downgraded by Barrenjoey.
SFR -0.2% possible bid for Khoemacau Copper
Speculative Stock of the Day: Adavale Resources (ADD) +87.5%. Massive nickel sulphides intersected at Kabanga Jirano project.

COMPANY NEWS

EBOS Group (EBO) – Chemist Warehouse has informed EBO that it plans to pursue alternative wholesale supply arrangements for its Australian stores, resulting in the non-renewal of the contract. EBO, which currently earns around $1.9bn in revenue annually from the contract, will continue to fulfil its services until the expiration date.
Sigma Healthcare Limited (SIG) – Signed a five-year supply contract with Chemist Warehouse, encompassing Pharmaceutical Benefits Scheme medicines and Fast-Moving-Consumer-Goods products. The contract, expected to generate a minimum of $3bn in revenue, will leverage Sigma’s distribution centres and spare capacity.
Baby Bunting (BBN) – Lowered its FY23 net profit guidance to a range of $13.5m to $15m, citing challenging conditions. The company also revised its sales expectations to be between $509m and $513m, with store sales expected to decline by 4% to 5%.
A2 Milk Company (A2M) – Received approval from Chinese authorities for the re-registration of its China-label infant milk formula in partnership with Synlait Milk (SM1), allowing manufacturing in compliance with the country’s regulations.
Cooper Energy (COE) – Revised its earnings and production guidance for FY23, lowering its EBITDAX range to $106-111m and revising production to 3.53-3.56m barrels.
Austal Limited (ASB) – Addressed recent media speculation about potential corporate activity involving the company. Austal regularly engages in discussions with potential parties for strategic initiatives, but there is no guarantee that any opportunity will proceed.
ASX Ltd (ASX) – Unveiled a new five-year strategy and updated financial guidance. The strategy focuses on technology modernisation and regulatory commitments, requiring capital management flexibility. Financial guidance includes expense growth of approximately 12% for FY23 and 12-15% for FY24, capital expenditure of $95m for FY23 and $110-$140m.
Perenti Ltd (PRN) – Upgraded revenue forecast for FY23 to $2.9bn, along with an upgrade in earnings before interest and tax to a range of $260m to $265m.
Musgrave Minerals Ltd (MGV) – Westgold Resources (WGX) has made a takeover offer to Musgrave Minerals offering Musgrave shareholders 1 Westgold share for every 5.37 Musgrave shares held. The offer values Musgrave at $177.3m or $0.30 per share implied price.
Magellan Funds Management (MFG) – reported $500m in outflows in May. Funds under management $41.4bn. April’s figure was $42.7bn.
Incitec Pivot (IPL) – Jeanne Johns will step down from her role as chief executive. Paul Victor, the company’s chief financial officer, has been appointed as interim CEO while a search is underway for a permanent CEO.
QANTAS (QAN) – Alan Joyce buys Sydney penthouse, sells $17m worth of QAN shares.

ECONOMIC & OTHER HEADLINES

RBA raised rates by 25bps today. Click here for the full statement from the board.

Inflation in Australia has passed its peak, but at 7% is still too high and it will be some time yet before it is back in the target range.
High inflation makes life difficult for people and damages the functioning of the economy.
Growth in the Australian economy has slowed and conditions in the labour market have eased, although they remain very tight.
Wages growth has picked up in response to the tight labour market and high inflation.
The Board is still seeking to keep the economy on an even keel as inflation returns to the 2–3% target range, but the path to achieving a soft landing remains a narrow one.
Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve.

The cash rate is still 3% below the inflation rate.

ASIAN MARKETS

New Zealand will ban single-use vapes in an effort to reduce harm to young people. Vapes will need child safety mechanisms and the government won’t allow new outlets within 300m of schools or traditional indigenous Maori meeting houses.
TSMC Capital expenditure for 2023 will wind up closer to US$32bn.

US AND EUROPEAN HEADLINES