29 July Markets at a glance

Around the grounds

It’s green on screen to start the week here at home, with the S&P/ASX 200 climbing nearly 1% thanks to the continued recovery miners and banks. Investors though are closely eyeing Wednesday’s June-quarter inflation print, which will be a crucial factor for the Reserve Bank of Australia ahead of the key policy meeting on August 6.

Back to the specifics, miners are doing the heavy lifting in today’s trade, with the index up over 1% as the price of iron ore rebounds thanks to fresh stimulus from top consumer China appeared to be bullish for manufacturing activity.

Financials are also up over 1%, with the Big Four banks rising between 0.8% and 1.2%. Gold stocks are also getting a leg up, jumping 2% as the price of bullion rose after U.S. Treasury yields continued to dip on rate-cut hopes.

Rounding it all out, the tech trade continues, with the Australian sub-index up 1.5% as the market prepares for strong earnings from the ‘Magnificent Seven’ this week in the U.S.  

Looking ahead on the corporate calendar locally it’s all our own about reporting season. Credit Corp group (CCP), Rio Tinto (RIO), Pinnacle Investment (PNI), Resmed (RMD) and Block (formerly known as AfterPay) (SQ2) all hand down numbers.

In the news

Let’s get to the unofficial start to reporting season. Credit Clear (CCR) shares have surged, as the company ups its full year underlying EBITDA forecasts and posted a 28% pop in June-quarter revenue. The stock is up over 47% YTD, as of last close.

Beforepay (B4P) shares are also on the rise after the lending fintech firm swung back to black in the fourth quarter, with net profit before tax coming in at AU$1.4 million, versus the AU$500,000 loss last year. The stock is up nearly 38% this year, as of last close.

In M&A - the takeover tussle for Pacific Smiles (PSQ) is ramping up, as the dental company confirms a revised takeover proposal from PE firm Gensis Capital to buy every PSQ share it doesn’t currently own for AU$.190 a share. While PSQ is assessing the revised proposal, the company continues to recommend National Dental Care’s bid at the same price.

Shares are up in today’s trade and have risen 26.4% this year, as of last close.

Boss Energy (BOE) shares meantime are marginally lower, as it pulls the pin on its offer to buy out Energy Resources Australia’s (ERA) uranium site in the Northern Territory, after a federal government decision to not renew the mine lease. On Friday the Australian government blocked ERA’s application, which is majority owned by Rio Tinto (RIO), to extend a mining lease for the area which has been opposed by traditional owners, the Mirarr Indigenous group.

Turning to the day’s broker moves and Jefferies has cut its price target on Australian listed shares of Mineral Resources (MIN) to AU$55 from AU$60 a share citing concern around the lithium miner’s net debt. Prices are also a concern, with the broker forecasting iron ore and lithium prices to continue to trend down, which will lead to a flat balance sheet until FY27. Jefferies has maintained its ‘hold’ rating on the stock, which is down over 23% this year as of last close.

Jefferies is also out with an updated view on Qantas (QAN) saying it expects the airline can restart dividend payouts and continue share buybacks while maintaining its capital expenditure of AU$3.7 billion. Price target though gets a trim from AU$7.94 to AU$7.85.

The stock is up 12.7% this year, as of last close.

Across the ditch, shares of Fletcher Building (FBU) have tanked after the construction services provided flagged supply chain issues at its Golden Bay cement business after a ship experienced delays due to inspections and repairs. The disruption is expected to reduce FY25 earnings by between NZ$10 to NZ$30 million.

The stock is down 30.5% YTD, as of last close.  

Finally, APRA says it will retain its strict home loan lending rules on concern the level of overall risk to the financial system remains elevated, with the outlook clouded by geopolitical instability and inflation holding above the central bank’s target range.

Going global

To the global stage, shares across the region are riding the wings of a dove, higher ahead of a week packed with earnings and a trio of central bank meetings, with expectations both the US Federal Reserve and the Bank of England will open the doors to easing, while Japan might lift borrowing costs.

Looking ahead, it’s all about the data with US jobs numbers released, and closely watched surveys on U.S. and global manufacturing surveys. It comes after a benign inflation print state side for June all but paving the way for a Fed rate cut in September. Futures have fully priced in a quarter-point move to the downside according to the CME FedWatch Tool.

More broadly on equity markets, Tokyo’s Nikkei 225 has managed to recover some of last week’s 6% shed, while MSCI’s broadest index of Asia-Pacific shares outside Japan is a touch firmer after loser 2% last week.  

For Wall Street, all eyes are on earnings, with around 40% of the S&P 500 reporting this week, including tech titans Microsoft (MSFT), Apple (APPL), Amazon (AMZN) and Facebook parent company Meta Platforms (META).

Finally, to currencies, the yen is giving back a little of its recent gains and the euro is flat after finding support around the $1.0825 US mark last week.

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