ASX LIVE | XJO to Rise, Market Awaits Inflation Data Today; Google and MSFT Post Earnings

The ASX 200 closed up 0.85%, trading at a 5-month high of 7,402.0 thanks to lower-than-expected CPI data that could hint that the RBA might pause potential rate hikes in its 1st August meeting.

• $AUD down -0.10% at 66.69 US cents
• ASX futures up +0.64% to 7,358.5
• S&P 500 up +0.28%
• NASDAQ up +0.61%
• DOW up +0.076%
• FTSE up +0.17%
• STOXX up +0.39%
• SSE down -0.42%
• Bitcoin up +0.42% to $US 29,260.74
• Spot gold up +0.23% to $US 1,969.86
• Iron ore up +0.19% to $US 112.72
• Brent Crude down -0.90% to $US 82.89pb

ASX Sector Top Performance

• Materials up 1.83%
• Information Technology up +1.15%
• Financials up +1.08%

The best individual performers:

• Beach Energy Ltd [ASX:BPT], up 6.89%
• Champion Iron [ASX:CIA], up 5.40%
• Pilbara Minerals [ASX:PLS], up 4.56%
• Mineral Resources [ASX:MIN], up 4.05%
• Domain Holdings Australia [ASX:DHG], up 3.83%

The worst performers:

• Neuren Pharmaceuticals [ASX:NEU], down 2.49%
• Skycity Entertainment Group [ASX:SKC], down 2.40%
• Ingenia Communities Group [ASX:INA], down 1.99%
• APM Human Services International [ASX:APM], down 1.72%
• Adbri Ltd [ASX:ABC], down 1.65%

All figures shown are from 4:35pm AEST

The ASX 200 closed up 0.85%, trading at a 5-month high of 7,402.0 thanks to lower-than-expected CPI data that could hint that the RBA might pause potential rate hikes in its 1st August meeting.

• $AUD down -0.10% at 66.69 US cents
• ASX futures up +0.64% to 7,358.5
• S&P 500 up +0.28%
• NASDAQ up +0.61%
• DOW up +0.076%
• FTSE up +0.17%
• STOXX up +0.39%
• SSE down -0.42%
• Bitcoin up +0.42% to $US 29,260.74
• Spot gold up +0.23% to $US 1,969.86
• Iron ore up +0.19% to $US 112.72
• Brent Crude down -0.90% to $US 82.89pb

ASX Sector Top Performance

• Materials up 1.83%
• Information Technology up +1.15%
• Financials up +1.08%

The best individual performers:

• Beach Energy Ltd [ASX:BPT], up 6.89%
• Champion Iron [ASX:CIA], up 5.40%
• Pilbara Minerals [ASX:PLS], up 4.56%
• Mineral Resources [ASX:MIN], up 4.05%
• Domain Holdings Australia [ASX:DHG], up 3.83%

The worst performers:

• Neuren Pharmaceuticals [ASX:NEU], down 2.49%
• Skycity Entertainment Group [ASX:SKC], down 2.40%
• Ingenia Communities Group [ASX:INA], down 1.99%
• APM Human Services International [ASX:APM], down 1.72%
• Adbri Ltd [ASX:ABC], down 1.65%

All figures shown are from 4:35pm AEST

Mineral Resources [ASX:MIN] shares are up by 3.76% despite missing guidance on lithium exports from its WA mine that it owns in partnership with battery chemicals giant Albemarle.

The Quarterly Exploration and Mining Activities Report released today for June showed shipments of spodumene concentrate were down 26% on the previous three months.

For the full year, shipments were 143k tonnes, below the targeted 150-170k.

In other big news, founder and director Chris Ellison announced the company would be pulling out of a billion-dollar deal to acquire a stake in downstream assets in China owned by Albermarle.

Mr Ellison pointed to trade disputes and uncertain conditions for Western countries in China as the main reason, saying:

‘When Australia is trading with China and Australia doesn’t go along with some of the social decisions that are made in China, then they go and ban our coal, they ban our wine … they ban a whole bunch of stuff,’

‘The risk for Australians in China is high, and we don’t want to trap money in China’.

The company has now outlined a plan for a WA plant for processing.

Currently, China dominates the downstream processing of spodumene into various lithium products, which many countries are now pursuing as ‘strategic importance’ in moving towards net-zero policies.

Source: International Energy Agency

The Reserve Bank of Australia (RBA) is less likely to increase interest rates at the August 1st meeting as inflation figures for June show a decline in price pressures for consumer goods.

Headline inflation dropped to 6% from 7% in March, below market expectations and the RBA’s forecasts. This easing of inflationary pressures reduces the urgency for aggressive rate hikes.

While some parts of the CPI basket experienced lower inflation, there are still areas of concern. Rent inflation accelerated to 6.7%, reaching the fastest pace since 2009 due to a property shortage, and services prices increased because of rising wages and utilities costs.

Despite the overall slowdown in inflation, the RBA is expected to maintain a cautious approach to tightening as it seeks to balance economic growth and its inflation target.

According to futures, traders now think there is a roughly 20% chance of a hike.

Here are some thoughts from economists on today’s numbers:

Shane Oliver, Head of Investing Strategy & Chief Economist at AMP, remarked today that he thought today’s results, ‘should be enough to hold next week, but its a close call given it’s concerns regarding services and wages‘.

James McIntyre, Bloomberg Economist, said, ‘Inflation still has a way to go before it’s on track to sustainability return to the central bank’s 2-3% target band. We think the RBA’s quarterly forecast review will support a decision to deliver a final 25-basis points in August’.

Alex Joiner, Chief Economist at IFM Investors, said, ‘Both Headline and CPI come in under expectations, both of the market and RBA. However, the ex-volatiles measure and market goods and services ex-volatiles are still solid. Likely takes a little pressure off the RBA to hike in August’.

The latest CPI inflation data was released today, showing rents increased by 2.5% nationally.

Broken down into the major cities, we see rental growth rates for flats or units continue to outpace growth in house rentals.

For a full breakdown of cities, including the top 20 areas for rent increases, click here to see core logic’s latest research.

Source: ABS

The latest CPI inflation data was released today, showing rents increased by 2.5% nationally.

Broken down into the major cities, we see rental growth rates for flats or units continue to outpace growth in house rentals.

For a full breakdown of cities, including the top 20 areas for rent increases, click here to see core logic’s latest research.

Source: ABS

Kogan.com’s sales and profits fell in the second half of 2022 as higher inflation and interest rates made consumers wary.

Kogan.com’s inventory has fallen nearly 60% compared with a year ago, but its sales are down more than 22% and profits along with it.

However, the company’s chief executive, Ruslan Kogan, said underlying profitability was improving despite the more difficult trading conditions as it began cutting costs.

Kogan.com shares are up by 7.2% to $6.24 today. The company has clawed back losses over the past 12 months but is still a fraction of its 2020 high of nearly $25 a share.

The softer-than-expected June quarter inflation today has helped the stock recover despite the mixed business update.

The decline in Kogan.com’s sales and profits is likely a reflection of the broader consumer slowdown in Australia. Higher inflation and interest rates are making it more expensive for consumers to spend, and this is having a negative impact on retail sales.

However, the company’s underlying profitability is improving, which suggests that it is well-positioned to weather the current economic storm. Kogan.com has been able to reduce its inventory levels and cut costs, which has helped to offset some of the decline in sales.

Big moves in the markets as investors digest the CPI data.

The bond market is signalling the Reserve Bank may be done.

The bond market has reacted sharply to the monthly CPI miss. The 3-year bond rate has dropped 9 basis points to 3.92%, while the 10-year rate is down only 2 basis points to 4%.

Futures markets have reduced the odds of a rate rise next Tuesday from 54% to 29% and have revised the peak cash rate to 4.3%.

That is less than one full rate increase to 4.35%.

Meanwhile, the ASX has lifted to a 5-month high, up 0.8% to 7,398.6 and the AUD/USD has dropped 0.6% to US$67.51 cents

Fabulous news on inflation – the free fall continues.
Inflation – monthly data – has fallen from a peak of 8.4% in Dec 2022 to 5.4% in June 2023:
Quarterly, the 0.8% rise is around 3.25% annualised with further falls certain.
RBA has over-egged the rate hikes.
My Two MInute Take pic.twitter.com/vzoHpGJGul

— Stephen Koukoulas (@TheKouk) July 26, 2023

The latest CPI data was just released, showing inflation slowing:

• Headline inflation: 6% YoY, below expectations of 6.2%
• Trimmed mean inflation (without food and energy costs): 5.9% below expectations of 6%
• Quarter on Quarter basis headline rose 0.8% below expectations of 1%.

The most significant price rises were Rents (+2.5%), International holiday travel and accommodation (+6.2%), Other financial services (+2.5%), and New dwelling purchases by owner-occupiers (+1.0%).

Source: ABS

Here’s a snapshot of the ASX today.

The ASX opened up 0.40% and quickly fell back to almost flat. The XJO currently sits 0.06% above the previous close as futures point to uncertainty about today’s CPI data, due out at 11:30 am AEST.

Here’s the current ASX Futures market:
Source: Investing.com

Alphabet Inc’s (GOOGL) Q2 2023 performance surpassed expectations, as Google’s ad revenue rose 3% year-over-year to $58.1 billion in Q2, beating analyst estimates.

The company also posted a profit of $18.4 billion, or $1.44 per share, a 15% increase from the same time last year and above expectations.

Revenue, too, outstripped predictions at $74.6 billion versus an expected $72.82 billion.

Alphabet’s performance has seen the share price rise in response, with shares up 6% in after-hours trading.

Microsoft reported record sales and profits on Tuesday, beating analyst expectations and its own estimates.

The company’s cloud computing business, Azure, was a major driver of growth, with sales up 27% in the quarter.

Microsoft’s revenue in the quarter was $56.2 billion, up 8% from a year earlier.

Earnings per share (EPS) was 2.69, 5.53% higher than estimates.

Microsoft’s investments in generative artificial intelligence (AI) are also starting to pay off. The company’s AI-powered assistant, Microsoft 365 Copilot, was announced last week and has already been met with positive reviews. Copilot is a powerful tool that can help users write code, generate text, and answer questions.

The company’s CEO, Satya Nadella, said that organizations are increasingly looking to AI to address their biggest challenges. ‘This next generation of AI will help us solve some of the world’s most pressing problems,’ he said.

While Microsoft’s cloud computing business is growing rapidly, sales of personal computers were down 4% for the quarter. This is due in part to the fact that consumers and businesses are no longer buying as many new PCs as they did during the height of the pandemic.

Overall, Microsoft’s results were a positive sign for the company but raised some concerns about costs.

The share price was down 3.70% in after-hours trading.

Good morning investors.

Lots of action in the markets overnight as Microsoft and Google posted earnings. Both surpassed revenue expectations but only Google saw its stock rise as investors were concerned about Microsofts slowing sales of PCs and ballooning costs related to AI.

Closer to home, Oil and Gas prices continue to rise, likely pushing the ASX Materials and Energy Sectors on for another day of gains.

Markets will be eagerly awaiting CPI data which is due out at 11:30am AEST. Keep an eye out for all of the news here.

• $AUD up +0.79% at 67.88 US cents
• ASX futures up +0.16% to 7,312.0
• S&P 500 up +0.28%
• NASDAQ up +0.61%
• DOW up +0.076%
• FTSE up +0.17%
• STOXX up +0.39%
• SSE up +2.13%
• Bitcoin up +0.18% to $US 29,225.68
• Spot gold up +0.54% to $US 1,965.1
• Iron ore up +0.04% to $US 112.51
• Brent Crude up +0.53% to $US 83.20pb

All figures shown are from 09:50am AEST