26 June Markets at a glance

Around the grounds

• CPI soars to 4%, AUD jumps
• ASX tumbles 1%
• Gold stocks slip on weak bullion
• Asian shares on shaky ground ahead of US inflation

Inflation, inflation, inflation. May CPI shocks hitting a six-month high, while a key measure of core inflation rose for a fourth straight month. The jump all but shutting the door on an August rate cut from the RBA.

May figures showed inflation jumped 4% in the month, up from the 3.6% in April and well above market forecasts of 3.8%. The core figure, closely watched by the RBA also climbed to a six-month peak, up to an annual 4.4%.

Futures now see a 30% chance of a quarter-point rate hike from the central bank in August, up from 12% before the data, with a cut now unlikely until April next year.

The RBA has warned it is alert to upside inflation risks, it continues to reiterate that it has not ruled anything in, or out when it comes to the path of policy.

Under the hood, electricity prices jumped by an annual rate of 6.5%, picking up from April's 4.2% rise, due to the unwinding of government rebates, while rents surged 7.4%.

The Australian dollar surged on the news and is currently trading around 66.7 US cents, up nearly half a per cent.

In turn the Australian share market as added to earlier losses, reversing yesterday’s 1% gain.

Interest-rate sensitive financials slipped, with heavyweight miners following suit down nearly 2% on weak iron ore prices. Gold players are lower with the broader sub-index down over 2% tracking falling bullion prices overnight as the US dollar and Treasury yields rise. 

The tech sector is the only stand out, trading in the black tracking gains on Wall Street.

In the news

Shares of Star Entertainment (SGR) are eyeing their best day since early as the company names Steve McCann as its group Chief Executive Officer and Managing Director effective July 8.

McCann, who served as the group CEO and MD at Blackstone-owned casino operator Crown Resorts, will take the reigns from interim group CEO Neale O’Connell.

It comes as the embattled casino operator continues under pressure from regulatory inquiries as it struggles to keep its gaming license at its Sydney casino.

Seven West Media (SWM) has unveiled a new business model, saying it will divide itself into three divisions, flagging redundancies and other cost cutting actions being taken amidst a strategic reorganisation as it looks to offset a weak advertising market. 

In the mining space, BHP Group (BHP) has warned its pathway to net zero will not be linear, with carbon emissions from operations are set to see a small increase in 2024. Despite the uptick, the company told an investor briefing it is on track to reach its target of reducing greenhouse gas emissions by at least 30% from fiscal 2020 levels with a 2050 goal to achieve net zero. 

In the broker space, Macquarie has cut its earnings forecasts for FY25-27 for Collins Foods (CKF) on the back of the company’s fiscal 2024 results. While the broker expects margins to remain under pressure in the FY25 it has flagged improvement in the longer term as cost-of-living pressures ease and menu prices catch up.

Price target also slashed 14% to AU$10.80/share. The stock is lower in today’s trade and down over 15% YTD, as of last close.

Elsewhere, Australian listed shares Super Retail Group (SUL) have touched an 18-week high as UBS upgrades the stock to ‘buy’ from ‘neutral’, citing more constructive consumers sentiment, and what it says is “an attractive risk-reward due to store and online growth”. Target also gets a boost to AU$15 from AU$13 a share.

The stock though is down nearly 13% year to date as of last close.  

Going global

Again, the focus remains on currency markets with the big dollar firmer, continuing to trade on the doorstep of the 160 yen barrier. Investor caution remains ahead of the key US price data release at the end of the week.

The euro eased marginally overnight to be steady in Asia trade, while the CAD briefly spiked to a three-week peak overnight after Canadian inflation came in above expectations sending some nerves into the market.

China’s yuan is feeling the pinch, squeezed by a stronger greenback.

On global equity markets, shares in the Asian region are choppy as investors brace for US inflation on Friday. MSCI’s broadest index of Asia-Pacific shares outside Japan were flat, continuing to inch away from recent two-year highs last week. The index though is up some 3.5% in the month, and on course for its fifth straight month of gains. 

All prices and analysis at 26 June 2024.  The content is distributed by WealthHub Securities Limited (WSL) (ABN 83 089 718 249)(AFSL No. 230704). WSL is a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited (ABN 12 004 044 937)(AFSL No. 230686) (NAB). NAB doesn’t guarantee its subsidiaries’ obligations or performance, or the products or services its subsidiaries offer.  This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice.  Past performance is not a reliable indicator of future performance.  Any comments, suggestions or views presented do not reflect the views of WSL and/or NAB.  Subject to any terms implied by law and which cannot be excluded, neither WSL nor NAB shall be liable for any errors, omissions, defects or misrepresentations in the information or general advice including any third party sourced data (including by reasons of negligence, negligent misstatement or otherwise) or for any loss or damage (whether direct or indirect) suffered by persons who use or rely on the general advice or information. If any law prohibits the exclusion of such liability, WSL and NAB limit its liability to the re-supply of the information, provided that such limitation is permitted by law and is fair and reasonable. For more information, please click here.