Markets at a glance 14 August

Around the grounds

It’s another positive day on the local share market after a softer US PPI print buoyed rate-cut expectations and saw some risk-appetite re-enter the ring. Investors attention now turn to the all-important CPI figure and retail sales data from the US later in the week to firm bets on an aggressive rate cut by the FOMC.

Across the sectors, gold plays are higher, to hit their highest level in three weeks as bullion hovers near an all-time high, while the interest-rate sensitive real estate stocks have climbed 1% in their fourth consecutive session of gains, with financials also higher.

Looking across the ditch, the kiwi dollar has taken a dive as the RBNZ cut interest rates a year earlier than the central banks own projections and signalled more to come. The 25-basis point cut to 5.25% marks the first easing since early 2020 with policy makers warning policy will need to be restrictive for a while yet, while still projecting a cash rate of 4.92% by December and 3.85% at the end of 2025. Market participants had priced in a near 69% chance of a quarter point cut following a string of softer economic data and a dovish turn by the central bank last month.  

In the news

Reporting season continues to be the name of the game, with AGL Energy (AGL) shares touching their highest level in a year as the country’s top power producer reported a near 190% surge in underlying profit for fiscal 2024, boosted by increased plant availability and higher electricity prices. AS of last close, the stock is up 14% YTD.

Commonwealth Bank of Australia (CBA) shares are marginally higher after the country’s biggest lender reported a 3% slip in full year cash profit. While smaller than the market was expecting the bank has warned high interest rates were affecting the economy and crimping household incomes.

Net interest margins, a closely watched measure fell 8 basis points to 1.99%. Shareholders though will see an increase to the dividend with CBA declaring a AU$2.50/share payout, up from the AU$2.40 a share a year ago.  

And a good news story for Seven Group Holdings (SVW), shares have marched higher as the investment firm posts a 30% rise in full-year net profit after tax to AU$850 million, and increases its dividend to 30 cents a share, from the 23 cents a year earlier.

The stock is down around 0.5% this year, as of last close.  

Australian listed shares of Evolution Mining (EVN) are among the day’s top gainers as the gold miner posts a 158% surge in full year profit. The stock is down nearly 4% this year, as of last close.

Pro Medicus (PME) shares are also tracking higher on an upbeat FY result which saw the medical imaging services provider posted a 36.5% rise in annual net profit and a near 30% pop in revenue from ordinary activities. Final dividend also getting a boost, up to 22 cents a share, from the 17 cents declared a year earlier. The stock is up over 37% YTD, as of last close.

Outside of reporting season, ASIC is suing ASX Ltd (ASX) for allegedly making misleading statements regarding the replace of its trading platform CHESS. The corporate regulator alleged the bourse operator’s statements that claimed the replacement remained ‘on track for go live’ in April 2023 and was ‘progressing well’ were misleading, adding the statements were ‘deceptive’ as the project was not moving ahead as planned when the statements were made in early February 2022.

In a statement to the market the ASX said it recognises the significant and serious nature of these proceedings, adding it cooperated fully with ASIC’s investigation and is now carefully reviewing and considering the allegations. Shares are lower in today’s trade, and up 4.5% this year as of last close.

Finally, mining giant BHP (BHP) has moved to remove workers on strike at its Escondida copper mine in Chile, as worries of a major hit to production grow and tensions rise at the site after a union rejected the company’s latest invitation for talks on pay.

Going global

Around the region Asian equities are higher with news Japanese Prime Minister Fumio Kishida will be stepping down as ruling party leader in September, ending a three-year term. The move saw Tokyo’s Nikkei 225 reverse its earlier gains in the session to trade flat. MSCI’s broadest index of Asia-Pacific shares outside of Japan is marginally higher while Hong Kong’s Hang Seng index has slipped, led by a decline in blue chip stocks.

US equity futures are back online and flat after a strong rebound on Wall Street overnight. It all comes ahead of key consumer price figures for July released tonight where markets are looking for a rise of 0.2% in both the headline and core, with the annual core rate slowing a tick to 3.2%.

Finally, to the currency trade, the US dollar continues on the back foot after that weaker-than-expected PPI data overnight, which in turn has support risk-sensitive currencies even as the crucial CPI print loom.  Traders were all but certain the Fed would cut rates at its September meeting before that PPI figure but have since ramped up bets for a 50-basis point cut to 53.5% from 40% a day earlier, according to the CME FedWatch Tool.

Elsewhere, the AUD has broken above a three-week peak, sterling is nearing a more than two-week high, and the euro is flat.

All prices and analysis at 14 August 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.