Markets at a glance 20 August

Around the grounds

It’s green on screen for the Australian share market, flirting once again with the 8,000-level milestone as shares look to tie its best winning streak of the year amid a wave of economic optimism.

Six of the ASX’s 11 sectors are higher, though real estate remains in the red, down nearly 1% in today’s trade, dogged by a big decline in Dexus shares. Financials are mixed, with Westpac and NAB down and ANZ and CBA higher while the heavyweight mining sector is doing the heavy lifting, with BHP Group (BHP) and Fortescue (FMG) both up around 1%.  

On the local currency front, the Australian dollar is holding near a five-week high brushing off hawkish minutes from the RBA’s latest meeting. Minutes from its August board meeting showed members considered raising the cash rate as underlying inflation remained too high but judged the case to hold steady was stronger as it would best balance the risks to both inflation and the labour market.

The central bank has held the benchmark steady for six straight meetings, having raised it by 425 basis points to a 12-year high since May 2022. Futures have priced in an 84% chance the RBA will cut by year end, with a cut in February more than fully priced in.  

Finally, across the ditch, New Zealand has promised a shake-up of consumer banking after the country’s watchdog said the sector lacked competition. Its report the New Zealand Commerce Commission report outlined 14 recommendations including boosting capital for Kiwibank, lowering barriers to entry, and ensuring open banking is operational by June 2026.

In the news

Getting into the thick of the numbers for reporting season, Dexus (DXS) has posted a wider-than-expected full year loss as high interest rates wiped off nearly AU$2 billion in value of its property portfolio. Net loss for the period came in at AU$1.58 billion for the year ended 30 June, much wider than the AU$488.5 million the market was expecting. Looking ahead the real estate firm has earmarked assets worth AU$2 billion for sale over the next three years to “further enhance the quality of our portfolio”.

Shares have taken a hit in today’s trade, down as much as 8% and set for the worst day since late March 2020 if losses hold.

ANZ Group (ANZ) is out with a trading update, reporting the number of home loan payments overdue edged up in the third quarter, hurt by stubbornly high inflation and high borrowing costs. Gross impaired assets slipped 2 basis points in the period, while its CET1 ratio stood at 13.3%, lower than the 13.5% at March end.

Shares of Aussie glove maker Ansell (ANN) have jumped to touch a 20-month high despite flagging a near 10% cut to its global workforce as it deals with the adoption of automation. This as it reports a near 50% drop in full year net profit but said key performance objectives were met and it sees sales and earnings improving as market conditions normalise.

The final dividend also got a haircut, coming in at 21.9 US cents per share, down over 16% from 2022/23.  The stock is up nearly 9% this year, as of last close.

Elsewhere, Australian listed shares of Baby Bunting (BBN) have also surged in today’s trade, up nearly 17% at one stage after the baby goods retailer reporting FY adjust NPAT in line with estimates and said the company was on track to achieve its 40% gross profit margin target in FY25. The stock is down nearly 24% this year, as of last close.  

Going global

Looking around the region, Asian equity markets are singing an optimistic tune, with stocks marching to a one-month high tracking a rally on Wall Street bolstered by expectations the US Federal Reserve will cut rates in September. While the data calendar is relatively light all eyes are on the release of the Fed’s July meeting minutes on Wednesday and Chair Jerome Powell’s speech at Jackson Hole on Friday.

On markets, MSCI’s broadest index of Asia-Pacific shares outside Japan is up around 0.4% while Tokyo’s Nikkei 225 is up 1.7% driven by a jump in tech stocks. US futures are back online showing a relatively flat open when the session North American session gets underway.

Finally on the currency front, the US dollar has retreated to touch a seven-month low on those dovish Fed expectations while sterling is hovering near a one-month high.

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