ASX LIVE | XJO to Open Down; Mild CPI Data from the US; Nick Scali, Newcrest, BBN, REA All Feature

ASX 200 falls 0.24% to 7,340.1 but still manages to stay up 0.39% for the week.

The biggest standout today was The Star Group which had its best performance in three years after renegotiating a tax with the NSW government that reduced it by two-thirds.

ASX 200 Sector Top Performance

• Discretionary +0.83%
• Health Care +0.33%
• Real Estate +0.10%

ASX 200 Sector Worst Performance

• Energy -1.93%
• Information Technology -0.60%
• Materials -0.49%

The best individual performers:

• The Star Entertainment Group [ASX:SGR], up 17.95%
• AMP Ltd [ASX:AMP], up 8.26%
• Bellevue Gold [ASX:FMG], up 5.43%
• Boral Ltd[ASX:DXS], up 4.64%
• PSC Insurance Group [ASX:GPT], up 4.24%

The worst individual performers:

• BSP Financial Group [ASX:BFL], down 4.58%
• New Hope Corporation [ASX:NHC], down 3.74%
• Genesis Energy [ASX:GNE], down 3.66%
• Bluescope Steel [ASX:BSL], down 3.56%
• The a2 Milk Company [ASX:A2M], down 3.14%

All figures shown are from 4:50pm AEST

What’s the intent of all these larger institutional players moving into the crypto space?

Ryan Clarkson-Ledward explores for Money Morning below.

https://www.moneymorning.com.au/20230811/paypal-russia-and-blackrock-are-diving-into-crypto.html

CoreLogic/HIA Report

Land prices continue to rise, despite the sharpest increase in interest rates in a generation.

The median lot price increased by
22.5% nationally in the 3 years to March '23.

(Compared to a 5.1% rise recorded in the 3 years prior) pic.twitter.com/YFDyeuQo5T

— Catherine Cashmore (@CC_CASHMORE) August 11, 2023

Baby Bunting [ASX:BBN], the prams and baby goods retailer, has reported a 4% decline in sales in the first six weeks of the new financial year.

This follows a 3.6% decline in comparable store sales in the full year 2023.

The company attributed the decline in sales to cost of living pressures, which have dented demand for its products.

Baby Bunting also flagged gross margin pressure, with gross margins over 2023 squeezed by 118 basis points to 37.4%.

Full-year 2023 sales inched up 3.4%, with its bottom line net profit slashed by nearly 50% to just $9.9 million.

Comparable store sales fell 3.6%. Online sales of $103 million now represent 20% of sales – about double pre-COVID levels.

A fully franked dividend of 4.8c per share was flagged, cut from 7.5c a year ago.

Baby Bunting is looking to cut costs by around $6 million to $8 million in this new financial year.

Costs of doing business jumped during 2023 by $16.5 million due to new and annualising stores, cost inflation (including staff wages) and one-off establishment costs associated with the marketplace and launching in New Zealand.

While there are some signs that the global economy may be slowing down, there is still no clear indication that a recession is imminent.

In fact, some US economists believe that the economy may start to grow again in the second half of the year.

However, it is important to monitor the situation, as the risk of a recession remains elevated.

One positive sign for the Australian economy is that there has been a bit of an uptick in job postings.

This suggests that businesses are still hiring, even though the economy is slowing down.

However, it is important to note that job postings are a lagging indicator.

Our Economic Activity Trackers are trending down in Aust and sideways to up a bit in the US and Europe. Still no sign of recession (or a growth pick up).
There has been a bit of an uptick in Indeed job postings in Australia.
Global air travel remains strong pic.twitter.com/hqr8KNzowU

— Shane Oliver (@ShaneOliverAMP) August 11, 2023

Australian real estate listings company REA Group [ASX:REA] shares are flat after an up-and-down day of trading.

The News Corp-owned company has cut its dividend by 4% to $1.58 for the full year. The company cited a 12% decline in national real estate listings in Australia last financial year as the main reason for the dividend cut.

Its Australian revenue declined by 1%, but its business in India, which is the country’s largest property portal by audience, increased its revenue by 46%, offsetting challenges locally

Despite recent low volume numbers, Bitcoin is still a strong growth contender.

Here’s its growth over four years, currently sitting at a staggering 207%.

#Bitcoin is up 207% in four years. https://t.co/gXRWgaxWwG

— Michael Saylor⚡️ (@saylor) August 10, 2023

The Star Entertainment Group [ASX:SGR] has seen shares explode, up 18.72% today, after announcing it has reached an agreement with the NSW Treasurer Daniel Mookhey to reduce the proposed 60.7% tax on poker machines by two-thirds.

‘We would have seen a ‘closed’ sign hanging up on Star’s premises,’ CEO Mr Mookhey said, as he announced the Labor government had drastically reduced the poker machine tax rate to a starting rate of 20.91% that will come into effect from next July.

The announcement is a welcome reprieve for the embattled gaming operators, which have been part of a crackdown and successive inquiries into money laundering and criminal activity at the casinos.

Workers at Chevron’s Wheatstone LNG platform are considering joining the Offshore Alliance strike action, which could affect almost 11% of global supply.

The strike threat has sent shockwaves through European gas markets, driving spot prices up as much as 40% on Wednesday.

Benchmark European gas futures, the Dutch TTF contract, closed 7% lower on Thursday European time after jumping 28%.

A dispute over pay and conditions is driving the strike. The Offshore Alliance, which represents the workers, is seeking a pay rise of 6% per year over three years, as well as improved overtime rates and allowances. Chevron has offered a pay rise of 3% per year over three years.

The strike threat is a major risk to the Australian LNG industry, a key export earner for the country.

The Wheatstone LNG project is Australia’s largest LNG project, with a 30 million tonnes per annum capacity. The Gorgon LNG project is also a significant player in the Australian LNG market, with a capacity of 15 million tonnes annually.

If the strike goes ahead, it could significantly impact global gas supplies. Australia is a major supplier of LNG to Europe, and the strike could disrupt the region’s supply at a time when gas prices are already high.

Source: TradingEconomics

ASX 200 hovered flat for much of the morning, now dropping down 0.23% at 7,340.6

Investors work their way through the slew of earnings reports out today, while Energy (-1.80%) and Materials (-0.74%)) were the worst performers, offsetting any gains seen in Discretionary (+0.74%) and Health Care (+0.33%), which were up modestly.

Furniture retailer Nick Scali [ASX:NCK] reported record profits for FY23 pushed up by strong digital sales and earnings growth.

Sales for FY23 rose 15.1% to $507.7 million, bringing NPAT to $101 million.

EBITDA saw a 23.8% increase to $154.3 million but the company highlighted weaker sales figures in the second half of the year — down 16.2% on the prior period.

Commenting on the result, the Managing Director, Anthony Scali, said:

‘Revenue in the year has been underpinned by the efforts of our Logistics team who were able to manage the peaks of product inflows enabling our lead times to customers to reduce as shipping delays eased.’

‘Trading during the year has been variable and challenging as consumer sentiment deteriorated in line with interest rate increases.’

News Corp saw its annual income fall 75% to US$ 187 million from US$ 760 million this financial year, with revenue down 5% to US$ 9.8 billion.

The Murdoch-run media empire owns newspapers in Australia, UK, and the US, as well as REA Group and Foxtel.

The company saw an EBITDA of US$ 1.4 billion, which is the second highest on record.

News Corp Australia’s revenue fell 15%, which the company said was impacted by a weaker AUD.

Newcrest Mining [ASX:NCM] reported earnings this morning, showing underlying profits down 11% to $778 million from last years $872 million.

EPS fell 16% to 86.8 cents, while debt increased 10%.

A death at Newcrest’s Brucejack Mine in British Columbia suspended operations there and slowed production, but the company still managed 8% higher gold production of 2.1 Moz.

Revenue was up 7% for FY23, and the company is offering a final dividend of US$ 55 cents fully franked, plus a special franked dividend of US$1.10 per share after the successful acquisition of Newmont Corporation occurs.

ASX opened down 0.26%, then recovered quickly, sitting at -0.13%, 7,348.2

Source: Market Index

XJO’s performance over the past 12 months has been muted thanks to central banks tightening. However, signs are pointing to inflation coming under control in major markets.

Inflation in the US rose for the first time in 13 months, but the modest increase might be enough to persuade the Federal Reserve to leave interest rates unchanged next month.

Annual inflation in the US rose to 3.2% in July, driven by higher costs in food, energy, and rent.

However, core inflation, which removes food and energy costs, dipped to 4.7% from 4.8%, giving economists confidence that inflation may be peaking.

The Fed is expected to leave interest rates unchanged at its September meeting, as it waits to see if inflation continues to moderate. However, some economists believe that the Fed may need to raise rates again in November if inflation does not cool off.

The latest data is a sign that inflation may be coming under control, but it is too early to say for sure.

Energy prices and rent in the US are showing clear signs of slowing pace, but it’s too early to say that this will be the peak rate for the US.

ASX is set to open down this morning but may have some strength to recover over the session as weak inflation data from the US kept Wall Street in the green overnight.

While well down from their interday highs, all the main US indices managed to stay up.

Earnings season continues today. We’ll cover all the biggest news.

• $AUD down -029% at 65.17 US cents
• ASX futures down -0.14% to 7,272.0
• S&P 500 flat +0.025%
• NASDAQ up +0.12%
• DOW up +0.15%
• FTSE up +0.41%
• STOXX up 0.92%
• SSE up +0.31%
• Bitcoin down -0.51% to $US 29,429.08
• Spot gold down -0.22% to $US 1,912.44
• Iron ore up +0.28% to $US 104.70
• Brent Crude down -0.08% to $US 86.33pb

All figures shown are from 09:57am AEST