ASX 200 closed down 38 points to 7004 (-0.5%) after a jump of 42 points at the opening bell, rebounding from last week’s sell-off before the market turned lower on weak consumer inflation data from China. Gold outperformed today, tracking an uptick in bullion prices. NST and NCM up 1.8% and 1.1%, respectively. Energy stocks jumped in early trade after oil prices rose sharply amid supply concerns before losing steam down 0.5%. BPT down 0.4%, STX gained 1.2% and KAR 2.3% higher. Tech stocks are in the green, with Info-Tech up 0.2%. XRO +0.9% WTC +0.2% and SQ2 +2.7%. Iron ore futures traded lower on the Singapore exchange dragging down our miners. FMG down 2.0%, BHP off 1.1% and RIO shed 1.1%. REITS slipped as bond yields rose. Big four banks all down. Big Bank Basket down to $168.26 (-0.2%). Defensive sectors underperformed. Healthcare stocks were mostly down, SHL down 0.6% and CSL off 1.0%. Insurers eased with QBE, MPL and AMP down 0.8%, 1.7%, and 1.0%. In corporate news, ALG +13.5% on good results. GQG up 3.1% after reporting a $5.2bn increase in FUM in June. EMR +4.7% hits full-year production guidance, and BST off 0.8% following BBRC to acquire all remaining ordinary shares. In economics, Australia’s building permits rose the most in 9 months up 20.6%. China’s CPI unexpectedly came in flat YoY, and PPI was down 5.4% YoY marking the ninth month of producer deflation. Asian markets mixed, Japan down 0.5%, HK up 0.4%, snapping a three-day losing streak, and China flat. Australian bond yields rose to decade highs, 10Y yield up 2bps to 4.27%. Australian dollar down 0.6% to 66.47c. Dow Jones futures down 112 points and Nasdaq futures down 97 points.

HIGHLIGHTS

  • Winners: LLL, CTT, WGX. LFG, BGL, EMR, TLG
  • Losers: CBO, IMU, NEU, PBH, SIG, SGF
  • Positive sectors: Gold miners. Tech. Lithium.
  • Negative sectors: Everything else. China data turned it.
  • High 7085 Low 6998.
  • Big Bank Basket: Lower at $168.26 (-0.15%)
  • All-Tech index: Unchanged.
  • Gold Steady at $2882
  • Bitcoin: Steady at US$30,146
  • Aussie Dollar:  Higher to 66.63c
  • 10-Year Yield: Higher at 4.28%
  • Asian markets: Japan down 0.5% HK up 0.4% and China unchanged.
  • US Futures: Dow down 112 Nasdaq down 97
  • European markets to open down around 0.3% across the board.

MAJOR MOVERS

  • LLL +8.4% roaring ahead. Broker upgrade.
  • LRS +2.9% Samba time again.
  • WGX +5.3% becoming a substantial holder from MS.
  • CTT +5.4% bucking the retail trend.
  • TLG +4.6% finding friends.
  • ALG +13.5% Theme parks bounce back.
  • MAY +9.9% production update in Cuba.
  • ADN +7.9% Letter of intent from IberClays
  • COB +20.6% recent testwork agreement.
  • WBT -3.5% fizz goes.
  • NEU -4.3% selling continues.
  • PBH -3.8% England win test.
  • ARU -2.9% rare earth slipping.
  • NXD -14.5% financial guidance.
  • ONE -27.7% light volume move.
  • INR -1.6% slips again.
  • Speculative Stock of the Day: Heavy Minerals (HVY) +100.0% Updated Port Gregory JORC mineral resource increased by 23%. Promotion by another newsletter too.

COMPANY NEWS

  • Newfield Resources Ltd (NWF) – Subsidiary Sierra Diamonds has entered into a Conditional and Non-Binding Terms sheet for a US$50m secured debt facility with the Africa Finance Corporation for the continuing development of the Tongo Diamond Mine into commercial production.
  • Best & Less Group Holdings Ltd (BST) – BBRC to compulsorily acquire all remaining ordinary shares in BST.
  • Westpac Bank (WBC) – Announced that Bill Evans, its chief economist since 1991, will be replaced by Luci Ellis, who currently serves as an assistant governor at the Reserve Bank of Australia. Evans will be taking up another role in the bank.
  • GQG Partners (GQG) – Experienced a $5.6bn increase in its funds under management for the month of June. The total FUM reached $104.1bn, up from $98.5bn in May. GQG recorded net outflows of $6.2bn as of June 30.
  • Patriot Battery Metals (PMT) – Entered a trading halt in response to speculation about a short sellers report, media speculation on M&A, and resource news. AFR reports suggest that PLS has hired resources bankers from RBC Capital Markets to consider a move to acquire PMT.
  • Emerald Resources (EMR) – Announced that it has achieved its full-year gold production guidance for FY23, with 108,866 ounces produced. The production for the June 2023 quarter at the Okvau Gold Mine in Cambodia was 27,245 ounces, bringing the total gold poured from operations to over 7,000 kilograms.
  • MFF Capital Investments (MFF) – Plans to continue its securities buy-back in July ahead of releasing full-year results. Estimated unaudited net profit after tax for FY23 is around $323.58m, and the board intends to increase dividends per share, starting at 5c for the period ending June.
  • Alkane Resources (ALK) – Drilling in the region Tomingley Gold has demonstrated high-grade gold mineralisation at multiple prospects. Significant gold intercepts were found at the McLeans Prospect, with mineralisation defined over 200 meters strike and 500 meters down dip. The El Paso and Plains prospects also showed promising gold mineralisation.
  • NextEd Group Ltd (NXD) – Expects to report record financial performance for the fiscal year ended June 30, 2023. The company anticipates revenues between $102m and $103m, a significant increase compared to the prior year. EBITDA is projected to be between $16.5m and $17m.
  • Race Oncology Ltd (RAC) – Executes global licence agreement with City of Hope to access FTO IP. Under the agreement, RAC will secure rights to a City of Hope patent application and associated know-how identifying that bisantrene may be the most potent inhibitor of the FTO pathway.
  • Ardent Leisure Group Ltd (ALG) – Posted preliminary results. FY23 full-year unaudited revenue of $83.8m up 70% from the prior year. ALG anticipates breaking even in 2H23 to deliver its first positive full-year EBITA result since FY17.
  • Propel Funeral Partners Ltd (PFP) – Announced it has executed binding legal documentation to acquire Harbour City Funeral Home and Terry Longley & Son for up to around $38m.
  • Carnarvon Energy Ltd (CVN) – Bedout divestment update. Parties targeting satisfaction of the final condition and transaction completion in Q3. CVN to hold ~$178m cash and an entitlement to a further ~$128m contribution towards its share of Dorado development costs upon divestment completion.
  • Gascoyne Resources Ltd (GCY) – Reports latest results from never-never resource expansion drilling, including 19.9m @ 8.12g/t Au from 451.0m.
  • Panoramic Resources Ltd (PAN) – Resumed production at Savannah Nickel Project.
  • Incannex Healthcare Ltd (IHL) – Announced intention to redomicile to the US and list all shares on NASDAQ.
  • Andromeda Metals Ltd (ADN) – Received a signed Letter of Intent from IberoClays for the exclusive distribution of Andromeda’s kaolin products into the Mediterranean region.
  • Recce Pharmaceuticals Ltd (RCE) – Announced that its Phase I/II UTI clinical trial evaluating RECCE® 327 (R327) at faster infusion rates has successfully dosed its first cohort of both male and female subjects with no serious adverse events.

ECONOMIC & OTHER HEADLINES

Monthly Business Turnover Indicator – Key statistics

In seasonally adjusted terms, the May 2023 monthly business turnover indicator showed:

  • Rises in 11 of the 13 published industries.
  • The largest rise was in Electricity, gas, water and waste services (12.8%).
  • The largest fall was in Mining (-6.0%).
  • Through the year, rises were seen in 12 of 13 published industries.

Building approvals:

  • Total dwellings approved rose 20.6%.
  • Private sector houses rose 0.9%, while private sector dwellings excluding houses rose 59.4%.
  • The value of non-residential buildings rose 6.6%, while value of new residential building rose 17.1%.
  • The value of total building rose 11.1%.
  • Bill Evans moves to new position at Westpac Bank as Luci Ellis (Ex-RBA Assistant governor) takes over as chief economist.

ASIAN MARKETS

  • China’s consumer inflation rate was flat in June while factory-gate prices fell further, fueling concerns about deflation risks.
  • The cost of meat — a staple in the Chinese diet — fell 7.2% in June from a year earlier. That was more than May’s 3.2% decrease.
  • Rio Tinto (RIO) – sees a host of near-term economic challenges in China, including in the country’s real estate industry, but reaffirmed its positive medium- and long-term outlook.
  • China’s stock market is facing a wave of selling as money locked up in stock funds matures. More than 200bn yuan (US$28bn) of cash that’s been stuck in mutual funds over the past three years is about to be freed up.
  • TSMC – reported better-than-expected sales on a boom in artificial intelligence applications. Second-quarter sales totaled NT$480.8bn (US$15.3bn) according to Bloomberg’s calculations, compared to an average analyst estimate of NT$476.2bn. Revenue in June came in at NT$156.4bn.

US AND EUROPEAN HEADLINES

  • Big US banks to report largest jump in loan losses since pandemic.
  • US and Germany resist pressure to advance Ukraine’s Nato bid.
  • Yellen said she “made clear that the United States is not seeking to decouple from China.”
  • US CPI Wednesday.

And finally….

The Airbus Pilot and Tempo Mach 2 Pilot

An Airbus 380 is on its way across the Atlantic. It flies consistently at 800 km/h at 30,000 feet, when suddenly a Eurofighter with a Tempo Mach 2 appears.

The pilot of the fighter jet slows down, flies alongside the Airbus and greets the pilot of the passenger plane by radio: “Airbus, boring flight isn’t it? Now have a look here!”

He rolls his jet on its back, accelerates, breaks through the sound barrier, rises rapidly to a dizzying height, and then swoops down almost to sea level in a breathtaking dive. He loops back next to the Airbus and asks: “Well, how was that?”

The Airbus pilot answers: “Very impressive, but watch this!”

The jet pilot watches the Airbus, but nothing happens. It continues to fly straight, at the same speed. After 15 minutes, the Airbus pilot radios, “Well, how was that?

Confused, the jet pilot asks, “What did you do?”

The Airbus 380 pilot laughs and says: “I got up, stretched my legs, walked to the back of the aircraft to use the washroom, then got a cup of coffee and a chocolate fudge pastry.”

The moral of the story is . . . .When you’re young, speed and adrenaline seems to be great. But as you get older and wiser, you learn that comfort and peace are more important. This is called S.O.S.: Slower, Older and Smarter, so it’s time to slow down and enjoy the rest of the trip.

Clarence

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