22 July Markets at a glance
Around the grounds
Third time isn’t a charm for the local market, as the S&P/ASX200 continues to retreat, down for a third straight session with mining and energy stocks leading the drag.
In the detail, miners have hit their lowest level since November 2022, after iron ore prices closed lower last week amid a lack of concrete stimulus from top consumer China. Energy has also eased as the price of oil settled at a one-month low on Friday but has since inched higher with no sign of a ceasefire in Gaza.
Gold has held around the US$2,408 an ounce handle, not far from last week’s record high while interest-rate sensitive financials remain under pressure, down nearly 1% in today’s trade.
In the news
Woodside Energy (WDS) shares have taken a hit as the company confirms it will acquire all of US LNG developer Tellurian (TELL) for a total value of AU$1.2 billion, including a cash payment of around AU$900 million, or $1 per share, which marks a 75% premium to the company’s last closing price.
The deal will give WDS access to a fully authorised project in the US as it grapples with difficulties for other LNG developers to advance proposals due to the Biden Administrations pause on approvals for ne LNG exports to countries that do not have a free trade agreement with the US.
Elsewhere, diversified miner South32 (S32) shares have been slammed, at one point down 13% as its quarterly manganese output fell over 60% and the company flagged a AU$554 million impairment charge against its Worsley Alumina operations which it will incur in its fiscal 2024 results. Looking ahead, more uncertainty as the company downgrades its FY25 production guidance.
Australian listed shares of Iress (IRE) have jumped touching the highest level since August 2023 as the tech firm ups first half EBITDA by around 50%, adding earnings in its core business of wealth and trading are expected to be materially higher on PCP.
The stock is up over 10% this year as of last close.
Insignia Financial (IFL) shares are also soaring, as the wealth manager says underlying FY24 earnings are expected to come in ahead of its upgraded guidance provided in February.
IFL stock is 1.7% YTD as of last close.
Perenti (PRN) shares are also tracking higher, to hit a seven-month high as the miner records strong free cash flow for FY24 and expects its newly awarded Barminco project will contribute around AU$160 million in revenue in fiscal 2025.
The stock is down over 7% this year as of last close.
Going global
Around the region, Asian shares have extended losses with little benefit from a surprise rate cut by the PBOC. Shares of MSCI’s broadest index of Asia-Pacific shares outside of Japan have eased further after last weeks 3% shed.
Tokyo’s Nikkei 225 is also under pressure, while the South Korean benchmark has lost around 1%.
In the US futures have come back online in the wake of President Joe Biden’s decision to bow out of the election race. Markets seemed to take the news in stride. When it comes to who will win the race to the White House betting sites now show a victory for Donald Trump has dipped 4 cents to 60 cents, while Vice President Kamala Harris’ chances climbed 12 cents to 39.
Looking ahead, focus will be on second quarter earnings with Google-parent company Alphabet (GOOGL) and Tesla (TSLA) the big tickets on this week’s docket. Others reporting include General Motors (GM), Ford (F) and Lockheed Martin (LMT).
On the data docket, a busy week in the US will all eyes on Friday’s PCE drop, the Fed’s favoured inflation gauge. Core is expected to rise 0.1% for the month of June, which would pull the annual down just a tick to 2.5%.
A benign outcome will firm the case for a September rate cut, which are nearly 100% priced in, according to the CME FedWatch Tool.
Finally, in currency markets, the big dollar has given back a little of last week’s safe haven gains, the euro is flat to higher and the Japanese yen is sitting around 157.51.
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