ASX LIVE | XJO Opens Up; Aussie Dollar Falls, Earnings Season Reports Out Today: NAB, TWE, DRR, Seek

The ASX closed up 0.4% to 7,305 following weaker than expected wages data that bolstered the case for the RBA leaving rates unchanged.

The healthcare sector was the best performer, rising 3.2%.

Cochlear shares climbed 5.7% after the hearing implant maker reported a 4% increase in full-year statutory profit to $301 million.

Blood plasma collector CSL added 3.7% after its full-year underlying profit rose 10% to $2.61 billion.

The interest rate-sensitive technology sector rose 1.7%. WiseTech Global rose 1.3%, Xero was up 2% and NEXTDC jumped 1.2%.

Life360 surged 12.3% after its revenue increased 45% year-on-year to A$70.8 million.

Iron ore prices briefly dipped below $100 per tonne today, reaching their lowest intraday level since June.

This was due to investors weighing China’s surprise interest rate cut against a new batch of data that showed the country’s economic recovery is still struggling.

Iron ore prices have fallen by about 13% from their peak in July, as hopes fade that Beijing will be able to stimulate its economy through monetary policy.

Other key industrial metals, such as copper and aluminium, have also been trending down from demand weakness out of China.

Source: Market Index

As stocks remain high on everyone’s list despite strong bond yields.

Here I explore if ASX equities are worth your time in the current market cycle.

https://www.moneymorning.com.au/20230815/are-the-biggest-asx-stocks-overvalued.html

Before paper, money was gold.

It was accepted almost everywhere as a medium of exchange and a store of value.

Even national currencies were backed by gold in some way up until the second half of the 20^th century.

Then, in 1971, the US used their immense military and political might to finally sever the link between money and gold.

There was nothing ‘independent’ about money anymore.

With global central banks printing money and crypto remaining in the picture, how will governments retain control of citizens’ forms of exchange?

Read on about Ryan’s thoughts about what’s next for gold below.

https://www.moneymorning.com.au/20230814/why-you-need-to-start-paying-attention-to-gold.html

China’s industrial output and retail sales growth slowed in July, undershooting expectations and adding to a raft of recent weak data.

The slowdown suggests that policymakers may need to step up support measures to shore up the faltering economy.

Industrial output grew 3.7% from a year earlier, slowing from the 4.4% pace seen in June.

Retail sales rose 2.5%, down from a 3.1% increase in June. Both figures were below expectations.

The slowdown was driven by a number of factors, including the ongoing property slump, rising debt levels, and weak global demand.

In a surprise move, the central bank cut key interest rates for the second time in three months today.

The move is a sign that policymakers are concerned about the slowdown and are willing to take steps to support growth.

However, it remains to be seen whether the rate cuts will be enough to turn things around. The economy is facing a number of headwinds, and it will take a concerted effort from policymakers to get it back on track.

Source: Bloomberg

China’s industrial output and retail sales growth slowed in July, undershooting expectations and adding to a raft of recent weak data.

The slowdown suggests that policymakers may need to step up support measures to shore up the faltering economy.

Industrial output grew 3.7% from a year earlier, slowing from the 4.4% pace seen in June.

Retail sales rose 2.5%, down from a 3.1% increase in June. Both figures were below expectations.

The slowdown was driven by a number of factors, including the ongoing property slump, rising debt levels, and weak global demand.

In a surprise move, the central bank cut key interest rates for the second time in three months today.

The move is a sign that policymakers are concerned about the slowdown and are willing to take steps to support growth.

However, it remains to be seen whether the rate cuts will be enough to turn things around. The economy is facing a number of headwinds, and it will take a concerted effort from policymakers to get it back on track.

Source: Bloomberg

Seek saw its share price drop today after reporting a 10% rise in revenues, below analyst expectations.

Today’s drop wiped out all the gains the company had seen in the past 12 months, with the share price down 0.90% for the past 12 months. Even before today’s drop, Seek had lagged behind its ASX technology peers on the [ASX:XTX], which are up 30% so far in 2023.

Reported net profit after tax (NPAT) was down 16% to $203 million as the company’s finances excluded the growth fund’s results.

Seek’s leadership attributed the decline in profits to the higher operating expenses it felt from high interest rates.

Seek saw its share price drop today after reporting a 10% rise in revenues, below analyst expectations.

Today’s drop wiped out all the gains the company had seen in the past 12 months, with the share price down 0.90% for the past 12 months. Even before today’s drop, Seek had lagged behind its ASX technology peers on the [ASX:XTX], which are up 30% so far in 2023.

Reported net profit after tax (NPAT) was down 16% to $203 million as the company’s finances excluded the growth fund’s results.

Seek’s leadership attributed the decline in profits to the higher operating expenses it felt from high interest rates.

RBA minutes released today showed confidence by board members that tightening policy was on track.

‘The full effects or earlier tightening were yet to be recorded … but consumption had already slowed significantly … and early signs that the labour market might be at a turning point,‘ the board said in the 1st August meeting.

The meeting did signal that board members were becoming concerned about the swift rebound in real estate rises and wage growth, with some board members arguing for one more rate rise in this cycle to ensure inflation remains in check.

Latest wage data that was released at the same time today showed the wage price index falling to 3.6%, down from last quarter’s 3.7% and below forecasts.

Wage Price Index

Source: Investing.com

Key takeaways from the minutes include:

• Inflation is easing but remains high and broadly based.
• Growth in Australia’s major trading partners is expected to be lower than forecast.
• The RBA expects inflation to decline over the year ahead, but to remain above the 2-3 per cent target range in late 2025.
• Possibility of rate increase in next meeting, aiming for peak in current tightening phase.
• Wages growth is expected to increase but is still expected to be below the level needed to bring inflation back to target.
• The economy is expected to grow well below its trend pace over 2023, but to gradually pick up over the forecast period.
• The outlook for the Australian economy is uncertain, and there are risks to the downside.

RBA minutes released today showed confidence by board members that tightening policy was on track.

‘The full effects or earlier tightening were yet to be recorded … but consumption had already slowed significantly … and early signs that the labour market might be at a turning point,‘ the board said in the 1st August meeting.

The meeting did signal that board members were becoming concerned about the swift rebound in real estate rises and wage growth, with some board members arguing for one more rate rise in this cycle to ensure inflation remains in check.

Latest wage data that was released at the same time today showed the wage price index falling to 3.6%, down from last quarter’s 3.7% and below forecasts.

Wage Price Index

Source: Investing.com

Key takeaways from the minutes include:

• Inflation is easing but remains high and broadly based.
• Growth in Australia’s major trading partners is expected to be lower than forecast.
• The RBA expects inflation to decline over the year ahead, but to remain above the 2-3 per cent target range in late 2025.
• Possibility of rate increase in next meeting, aiming for peak in current tightening phase.
• Wages growth is expected to increase but is still expected to be below the level needed to bring inflation back to target.
• The economy is expected to grow well below its trend pace over 2023, but to gradually pick up over the forecast period.
• The outlook for the Australian economy is uncertain, and there are risks to the downside.

Lithium developer Lake Resources has seen its shares surge by 31% this morning after posting a positive update on its Kachi Project in Argentina.

Shares are currently trading at 27.5 cents per share after reporting successful testing at its lithium brine project.

The company said it had, ‘proved the concept of extraction and injection to support the production of high purity-grade lithium carbonate‘

‘The extraction and injection testing confirms highly favourable reservoir hydraulic properties and allows us to optimise the future wellfield,’ Lake chief executive David Dickson said.

Lithium developer Lake Resources has seen its shares surge by 31% this morning after posting a positive update on its Kachi Project in Argentina.

Shares are currently trading at 27.5 cents per share after reporting successful testing at its lithium brine project.

The company said it had, ‘proved the concept of extraction and injection to support the production of high purity-grade lithium carbonate‘

‘The extraction and injection testing confirms highly favourable reservoir hydraulic properties and allows us to optimise the future wellfield,’ Lake chief executive David Dickson said.

There are now 14 banks calling for a recession and 6 banks calling for a soft landing.

At the Fed’s last meeting, they said they are no longer forecasting a recession.

JP Morgan was the most recent bank to say they no longer expect a recession.

Can the Fed achieve a soft… pic.twitter.com/8LFUfU9ETU

— The Kobeissi Letter (@KobeissiLetter) August 14, 2023

There are now 14 banks calling for a recession and 6 banks calling for a soft landing.

At the Fed’s last meeting, they said they are no longer forecasting a recession.

JP Morgan was the most recent bank to say they no longer expect a recession.

Can the Fed achieve a soft… pic.twitter.com/8LFUfU9ETU

— The Kobeissi Letter (@KobeissiLetter) August 14, 2023

TWE posted a 5% drop in revenue and NPAT in its earnings today but managed to withstand the tough consumer spending environment with a strong performance from its high-end Penfolds brand sales.

Source: TWE

TWE lifted its final dividend payout to 17 cents per share, with profit margins increasing thanks to a 14.2% rise in earnings from its Penfolds division to $365 million.

The budget brands of wine reported a 5.4% drop in earnings to $81.7 million.

This division includes; Wolf Blass, Lindermans, Squealing Pig, Pepperjack, Seppelt, 19 Crimes, and Wynns.

TWE posted a 5% drop in revenue and NPAT in its earnings today but managed to withstand the tough consumer spending environment with a strong performance from its high-end Penfolds brand sales.

Source: TWE

TWE lifted its final dividend payout to 17 cents per share, with profit margins increasing thanks to a 14.2% rise in earnings from its Penfolds division to $365 million.

The budget brands of wine reported a 5.4% drop in earnings to $81.7 million.

This division includes; Wolf Blass, Lindermans, Squealing Pig, Pepperjack, Seppelt, 19 Crimes, and Wynns.

National Australia Bank reports $1.9 billion in cash earnings over the three months to the end of June, a 5.8% growth vs 3Q22 — but down 5% on the quarterly average over 1H23

Revenue was down 2% due to lower margins from home loan competition, but the company maintained that things remained positive despite challenging conditions, with long-term loans overdue only increasing by 0.05%.

NAB said this ‘mainly reflects a modest deterioration in delinquencies across the group’s home loan and business lending portfolios‘.

The company also announced plans to buy back up to $1.5 billion shares, signalling a strong capital position.

National Australia Bank reports $1.9 billion in cash earnings over the three months to the end of June, a 5.8% growth vs 3Q22 — but down 5% on the quarterly average over 1H23

Revenue was down 2% due to lower margins from home loan competition, but the company maintained that things remained positive despite challenging conditions, with long-term loans overdue only increasing by 0.05%.

NAB said this ‘mainly reflects a modest deterioration in delinquencies across the group’s home loan and business lending portfolios‘.

The company also announced plans to buy back up to $1.5 billion shares, signalling a strong capital position.

ASX opened up 0.20% at 7,291.7 this morning, following positive movement overnight from Wall Street as Nvidia pushed the Nasdaq higher on renewed enthusiasm for AI growth.

Meanwhile, in Australia, concerns in the materials sector yesterday are set to continue as China’s economic woes continue.

China’s ailing property market dragged the AUD/USD paring down to a 9-month low as concerns about Iron ore prices continue as China’s largest property developer Country Garden suspended trading in nearly a dozen offshore bonds yesterday as it attempts to avoid default.

Country Garden has around $194 billion in liabilities and has said it had underestimated the market downturn.

There now poses a risk for the problem to metastasise as China’s trust industry now appears exposed, with one of the largest trusts Zhongzhi group reporting to have missed its last payment.

Source: Bloomberg

• $AUD flat +0.05% at 64.87 US cents
• ASX futures flat +0.07% to 7,221.0
• S&P 500 up +0.58%
• NASDAQ up +1.05%
• DOW flat +0.074%
• FTSE down -0.23%
• STOXX up 0.19%
• SSE down -0.34%
• Bitcoin up +0.43% to $US 29,407.27
• Spot gold down -0.32% to $US 1,907.79
• Iron ore up +0.74% to $US 105.37
• Brent Crude down -0.67% to $US 86.23pb

All figures shown are from 10:10am AEST

ASX opened up 0.20% at 7,291.7 this morning, following positive movement overnight from Wall Street as Nvidia pushed the Nasdaq higher on renewed enthusiasm for AI growth.

Meanwhile, in Australia, concerns in the materials sector yesterday are set to continue as China’s economic woes continue.

China’s ailing property market dragged the AUD/USD paring down to a 9-month low as concerns about Iron ore prices continue as China’s largest property developer Country Garden suspended trading in nearly a dozen offshore bonds yesterday as it attempts to avoid default.

Country Garden has around $194 billion in liabilities and has said it had underestimated the market downturn.

There now poses a risk for the problem to metastasise as China’s trust industry now appears exposed, with one of the largest trusts Zhongzhi group reporting to have missed its last payment.

Source: Bloomberg

• $AUD flat +0.05% at 64.87 US cents
• ASX futures flat +0.07% to 7,221.0
• S&P 500 up +0.58%
• NASDAQ up +1.05%
• DOW flat +0.074%
• FTSE down -0.23%
• STOXX up 0.19%
• SSE down -0.34%
• Bitcoin up +0.43% to $US 29,407.27
• Spot gold down -0.32% to $US 1,907.79
• Iron ore up +0.74% to $US 105.37
• Brent Crude down -0.67% to $US 86.23pb

All figures shown are from 10:10am AEST