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21 June Markets at a glance

ASX treads water as interest rate jitters and stubbornly high inflation dampens investor sentiment and caps gains. Pilbara Minerals stumbles and Guzman Y Gomez gives back some of yesterday’s gains on its second day of trade. Around the region, Asian shares lose momentum set to end the week flat.

Around the grounds

The S&P/ASX200 again is lacking direction, trading flat to negative on the final session of the week. Miners and gold stocks are supporting the broader bourse, although dwindling hopes of an interest rate cut from the RBA continues to weigh on sentiment and has capped gains.

More broadly, the east of the country could be facing a gas shortage after a cold snap drove up demand for heating and power while supply fell due to an extended outage at the region’s main gas plant.

Late on Wednesday, the Australian Energy Market Operator (AEMO), issued a notice warning of heightened risks of gas supply shortfalls during Australia's winter months.

In the news

Australian listed shares of Pilbara Minerals (PLS) are under pressure nearing August 2022 lows as the country’s biggest independent lithium producer, said it could double its production capacity for lithium spodumene at its Western Australia operations, but the expansion to do so could incur an additional capital expenditure of AU$1.2 billion.

Treasure Wine Estates (TWE) shares have touched a 10-week high, as the company cites strong initial demand in China for its portfolio of products. Morning star says, “demand for Australia's Penfolds brand remains healthy in China, allowing a pricing uptick".

The stock is set for its fourth consecutive session of gains, up 4% for the week so far and up over 15% this year, as of last close.

Shares of Steadfast Group (SDF) are also marching higher, as the insurance broker ups its FY24 underlying EBIT forecasts to between AU$525 million and AU$530 million. The stock has fallen 1.03% this year as of last close.

In the IPO market, newly listed shares of Guzman Y Gomez (GYG) have tumbled as much as 10% in their second day of trade after a dazzling debut yesterday which marked Australia’s biggest IPO in 11 months. Shares are still trading at a 29.4% premium to its IPO price of AU$22/share.

And across the ditch New Zealand listed shares of KMD brands (KMD) have touched a record low, down as much as 5% as the lifestyle and sports company slashes its full-year underlying EBITDA forecast to NZ$50 million versus the NZ$105.9 million in FY23.

The company says its Kathmandu brand is the laggard, experiencing a slower-than-expected start to the key winter promotional period, with winter sales in the first three weeks 11.5% below last year. The stock is down nearly 47% YTD, as of last close.

Finally, looking at the corporate calendar in the week ahead, Metcash (MTS) and Collins Foods (CKF) will hand down full year earnings on June 24th and 25th respectively. 

Going global

Around the region, Asian shares are losing steam after a rally to 26-month highs, which has prompted some profit taking.

MSCI’s broadest index of Asia-Pacific shares outside Japan is down around 0.6%, dragged lower by technology shares, tracking a choppy session on Wall Street. 

Tokyo’s Nikkei 225 has managed to eke out a small gain, though data earlier in the day showed Japan’s demand-led inflation slowed in May, which could potentially complicate the outlook for interest rate hikes.

Chinese stocks are mostly flat, with the Shanghai Composite index struggling to stay above the technical 3,000 point level, while Hong Kong’s Hang Seng has dropped nearly 1%.

In currency markets, the US dollar continues to track higher to touch a fresh eight-week high against the yen and edged close to a five-week peak against Sterling.

Overnight the big dollar soared, to turn positive for the week, following a second rate cut at the Swiss National Bank and signals from the Bank of England (BoE) a cut to interest rates could be on the cards as soon as August.

The euro has edged marginally higher, while the Australian unit is trading around 66.5 US cents.

All prices and analysis at 21 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.

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