19 July Markets at a glance

Around the grounds

It’s a sea of red for the Australian share market, down over 1% on strengthening bets of an interest rate hike from the RBA at its next policy meeting after the June jobs report showed the country added more than twice as many jobs the market was expecting.

Tech, financials and the metals and mining index are all under pressure while the Australian dollar is stronger trading around the 67 US cent handle.

Across the ditch, New Zealand’s benchmark is a touch lower, while Japan’s Nikkei 225 has broken below the key 40-thousand level for the first time since July 2, more on global markets a little later.

In commodities, both brent and WTI crude are lower, gold has slipped, and Dalian iron ore futures are flat.  

In the news

Whitehaven Coal (WHC) shares are under pressure as the company flags higher prices for steelmaking coal in the near and medium term on the back of supply constraints and strong demand from India.

It comes as the country’s biggest independent coal miner nearly doubled production in the fourth quarter, underpinned by strong performance at its NSW operations and Narrabri, with the mines acquired from BHP Group (BHP) further boosting output.  

Australian listed shares of Lifestyle Communities (LIC) have slumped to their lowest level since September 2020 as the company pulls all forward-looking guidance saying it's difficult to quantify the impact of recent media coverage on future sales. LIC has rejected recent allegations made in a Victorian Civil and Administrative Tribunal from a group of homeowners.

The stock is down nearly 40% YTD as of last close.  

On the flip side, a rare bright spot for Adore Beauty (ABY) shares, hitting their highest level since late June after reporting an over 7% jump in FY24 unaudited revenue.

ABY is down over 38% this year, as of last close.

Finally, the banks are on the watchlist, as Australia’s prudential regulator halved the AU$1 billion operation risk capital add-on it had imposed on Westpac (WBC) in 2019 after identifying problems in the bank’s risk governance self-assessment. The move will boost Westpac’s CET1 capital ratio by 18 basis points.

Back in 2019 APRA had asked Westpac, ANZ Group (ANZ) and National Australia Bank (NAB) to set aside AU$500 million each until they strengthen their risk management and reimburse customers for wrongly charged fees.

Going global

Back to those global wobbles. Asian equities are set to end the week on the back foot amid uncertainty across the geopolitical landscape and economic headwinds even as the global rate easing cycle gets underway.

MSCI’s broadest index of Asia-Pacific shares outside of Japan is down a touch but headed for its worst week in over a month with a 2.4% loss expected. Tokyo’s Nikkei 225, as mentioned earlier, has hit a two-week low, extending its sharp 2.4% fall the previous session. The Nikkei is set to end the week 2.7% lower, its steepest weekly decline in three months.  

Tech stocks continue to struggle after deepening Sino-US tensions sparked a sell-off on Wednesday, while uncertainty over U.S. President Joe Biden’s fate in remaining in the presidential race weighs on sentiment. It’s green on screen though as US futures come back online ahead of the Wall Street session.

In China – investors were left disappointed over the lack of details provided on the implementation steps for reaching the country’s economic policy goals at the end of its third plenum yesterday.

Finally in currencies, the Euro remains a tad weaker after the ECB kept rates on hold, as expected, but left the door wide open to a September rate cut. Sterling has dipped while the yen is a touch firmer.

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