24 July Markets at a glance

Around the grounds

The Australian share market has managed to recoup some of the day’s earlier losses to trade flat to positive, though the energy and mining players are capping gains on the back of lacklustre commodity prices.

Energy stocks have tumbled to a one-month low, on track for a fifth consecutive session of losses after the price of oil dropped 2% overnight. Futures however have clawed back some of those losses, with Brent up 0.53% to US$81.44 a barrel, while WTI gained 0.51% to sit at US$77.35 per barrel.

The energy sub-index has fallen over 6% year to date, as of last close.  

A slip in the price of iron ore is also putting pressure on the mining index, down around 0.7% in today’s trade, and on track for a seventh consecutive day of losses. The sub-index is down 15.7% this year, as of last close. Gold stocks though are a bright spot, up 1% on higher bullion prices as traders assume the brace position ahead of key US data later in the week.

Across the ditch, New Zealand’s NZX 50 is trading relatively flat, down just 0.1%.  

In the news

It’s a turbulent day for shares of Australian listed Flight Centre (FLT) crashing as much as 8.8% in today’s trade as the company cuts ifs FY24 guidance. Now expected between AU$316 million and AU$324 million.

The stock is up 13% this year, as of last close.

Telix Pharmaceuticals (TLX) is also under pressure, down around 8% as the biopharma company raises AU$650 million via a convertible bonds issue due in 2029. The bonds will be converted into shares if they hit a conversion price of AU24.78 a share, which represents an over 22% premium to the company’s last closing price.

The stock has more than doubled this year as of last close.

Turning to the miners, Pilbara Minerals (PLS) is optimistic lithium prices have bottomed after the exit of higher cost suppliers this year.

Customer orders remain strong, with the company tipping higher production for fiscal 2025 despite reporting a near 70% plunge in FY24 revenue.  On a quarterly basis, performance was a different story with the country’s biggest pure-play lithium miner posting a 58% jump in June quarter revenue from March due to an increase in sales volume and average realised prices.

Finally in the broker space, Citi has trimmed its price target on Lynas Rare Earths (LYC) saying the company’s June production missed estimates by 16%. Looking ahead the broker has flagged possible cost pressures as supply remains unclear. ‘Sell’ rating retained, target cut to AU$5.20 from AU$5.30 a share.

LYC stock is down around 16% this year, as of last close.

Going global

To the global stage, shares across the Asian region are subdued after earnings from the tech behemoths Tesla and Alphabet failed to impress, denting investor sentiment. MSCI’s broadest index of Asia-Pacific shares outside of Japan is a tick lower, while Japan’s Nikkei 224 has lost some 0.2%.

Futures in the US are pointing to a weaker open after Tesla reported its smallest profit margin in more than five years, while Google-parent company Alphabet slipped in after-hours trade despite a firm beat on both the top and bottom line.

In forex markets, unsurprisingly commodity currencies are under pressure, falling to multi-week lows tracking weakness in Chinese demand, while the yen has surged as short sellers bail out ahead of the Bank of Japan’s key policy meeting next week. Futures are pricing in a 44% chance the BoJ will hike rates by 10 basis points.

The euro has held steady in Asia trade against the US dollar but has dropped over 1% against the yen.

It’s a volatile story for the AUD, NZD and CAD as falls in those commodity plays as well as a ripple of risk aversion in equities have dragged them down against the greenback.

The Australian unit has touched a five-week low of just below the 66.12 US cent handle, while the Kiwi has continued to hover around yesterday’s two-and-a-half month low and the Loonie has made a six-week low ahead of its central bank meeting later tonight. Markets see an 84% chance the Bank of Canada (BOC) will cut rates by 25 basis points.

Looking ahead to the bigger picture, traders are watching and waiting on U.S. GDP and core CPI data due later in the week for further clarification on the Fed’s path of policy for the rest of the year. The market is pricing in 62 basis points of easing this year, with a cut in September priced in at 95%, according to the CME FedWatch Tool. 

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