The S&P/ASX 200 fell 0.53% on Wednesday, taking the benchmark index below 7,000.
The biggest decliners of the day:
IDP Education (ASX:IEL) has appointed outgoing Adore Beauty (ASX:ABY) CEO Tennealle O’Shannessy as its new chief executive officer and managing director.
IDP said O’Shannessy’s appointment comes after an ‘extensive global search’.
Prior to her stint at Adore, O’Shannessy spent almost a decade at SEEK, where she helped establish a public-private partnership between SEEK and Swinburne University.
IDP said O’Shannessy’s experience ‘aligns with IDP’s ambitious strategy to reinvent the international education sector.’
O’Shannessy’s fixed annual remuneration will be set at $1.1 million, inclusive of benefits and allowances. She will be eligible to participate in IDP’s annual short term incentive program, which is currently set at 100% of her $1.1 million fixed annual remuneration.
IDP will also pay O’Shannessy $250,000 as a sign-on incentive for any incentive arrangements foregone at Adore Beauty.
In an announcement after market close on Wednesday, beauty retailer Adore Beauty (ASX:ABY) announced the resignation of its CEO, Tennealle O’Shannessy.
O’Shannessy will leave the retailer in February 2023 and take up the chief executive role at fellow ASX stock IDP Education (ASX:IEL).
ABY chair Marina Go commented:
On behalf of the Board and all of the Adore Beauty team, I would like to thank Tennealle for her outstanding leadership and contribution during a particularly challenging couple of years. As CEO, Tennealle has done an excellent job delivering Adore Beauty’s financial and operational successes, including exceeding prospectus forecasts, and leaves the business well-positioned for future growth.
ABY shares are down 65% year to date.
In its FY22 results presentation, the Commonwealth Bank (ASX:CBA) said the Australian economy has ‘strong fundamentals’, with the inflation challenge ‘favourable versus many other countries.’
CBA did note the tightening cycle is having a ‘significant impact’:
The bank is concerned about a wage price spiral occurring offshore while also foreseeing recessions in the US and the UK.
As part of its FY22 results, the Commonwealth Bank (ASX:CBA) disclosed it had revalued its Klarna stake down from FY21’s $2.7 billion to $408 million as of 30 June 2021.
CBA said the lofty impairment was due to Klarna’s recent private capital raise in July (in which CBA participated by investing a further $47 million), which had the implied revenue multiple of 4x.
The $2.7 billion valuation as at June 30 2021 was based on another private capital raise (CBA didn’t participate).
That time, however, the implied revenue multiple adopted by CBA was 32x.
CBA explained the steep valuation reduction thus:
The $2,293m reduction in valuation from 30 June 2021 to 30 June 2022 was driven by changes in the valuation implied from each private equity capital raise, as well as the reduction in revenue multiples of market listed comparable companies.
— Money Morning (@FatTailDaily) August 10, 2022
The biggest All Ords advancers at midday:
US headline CPI is expected to rise 0.2% month over month.
If tomorrow's headline CPI report is inline with expectations (+0.2%), it will be the third largest decline in the m/m reading (+1.3% down to +0.2%) dating back to at least 1960.
— Bespoke (@bespokeinvest) August 9, 2022
All in all, 2022 is turning out to be a record year for global renewable energy investment.
In the first six months of the year, US$226 billion has poured into green energy, an 11% increase year on year, according to BloombergNEF (BNEF).
US$120 billion has flowed into large- and small-scale solar projects, up 33% from the same time last year.
In fact, solar is having a great year. As Bloomberg Intelligence senior analyst Rob Barnett told Yahoo! Finance:
‘The global solar picture is just staggering at this point. We are on track to install something like 250 gigawatts of solar capacity this year.’
But wind is also having a cracker year.
Even with global supply chain disruptions and inflation hitting the sector, BNEF expects that there’ll be a record 106 gigawatts of wind power installed globally in 2022.
Much of that is coming from China, but more recently, too, from the European Union as it moves away from Russian gas.
But of course, when it comes to investing in renewables, the motherload came from the US this week.
After months of negotiations and an all-nighter, the US Senate passed the Inflation Reduction Act of 2022 on Monday.
As we mentioned last week, this landmark deal will bring in one of the most significant investments in clean energy until now. It provides US$369 billion in funding to cut US emissions by about 40% by 2030.
Investing in increasing energy supplies and developing local renewable energy when energy prices are soaring isn’t a bad idea.
But news of the deal quickly seeped through clean energy stocks.
As soon as the news hit the streets, the Invesco Solar ETF jumped 4%. Both Tesla and hydrogen company Plug Power rose by about 5%.
You can see how investment news can have a big impact on stocks.
Read full article here.
Writing in Bloomberg, Edward Harrison made the case that the current rally is characteristic of a bear-market bounce … and will be short-lived.
The Fed can’t possibly be happy with this. Their role right now is to slow inflation by raising interest rates in order to tighten financial conditions. By definition, they can’t do that if financial conditions are loosening. After basically front-running the Fed’s pivot to jumbo rate hikes, the market is now fighting the Fed every step of the way as the central bank maintains an aggressive anti-inflation posture.
If I had to link all these bullish signals into one market slogan, it would be “fight the Fed.” Basically, the markets are signaling that the Fed will abruptly halt its inflation-chasing regime and turn tail to start cutting rates when the US economy starts to weaken. And when they do, inflation won’t be a problem.
But if you listen to Fed officials, their determination to keep going is clear. Fed Governor Michelle Bowman recently argued for continuing with the three-quarters percentage point hikes.
“My view is that similarly sized increases should be on the table until we see inflation declining in a consistent, meaningful, and lasting way.”
That would get us to 3.25% on the Fed funds rate in September, with two more policy meetings left in the year.
But if core PCE remains elevated, we should expect more rate increases beyond September. And that’s the more likely scenario. Bloomberg Economics says that it expects the core consumer price index to accelerate, not decline. They see it going from 5.9% to 6.2% in the report to be released and maybe even 7% by year end.
Under this scenario, far from being done and even cutting rates early in 2023, the Fed would be raising rates further than the current projection in 2022 and continue to do so in 2023.
Unless the Fed abandons its inflation goal, the Bears will have the upper hand in this case. A more benign inflation outlook will favor Goldilocks believers.
The S&P/ASX 200 is down 0.4% in morning trade.
Infant formula stock A2 Milk (ASX:A2M) is down 9% after the FDA defers its request to supply baby formula to the US.
Gold miner St Barbara (ASX:SBM) is down 9% after flagging higher cost guidance at Leonora for FY23 and lower gold grade from Gwalia for FY23 and FY24.
Computershare (ASX:CPU) is currently down 7.5% after releasing its FY22 results, citing ‘a challenging market environment in the second half of the year, especially in the last quarter.’
Grain and edible oils business Graincorp (ASX:GNC) upgraded its earnings guidance for the 12 months ending 30 September 2022.
Graincorp has bumped its FY22 underlying EBITDA range to $680 million – 730 million from $590 million – 670 million.
FY22 underlying NPAT has been raised to $365 million – 400 million from $310 million -370 million.
Managing Director and CEO Robert Spurway said:
We are pleased to upgrade our FY22 earnings guidance, with both our Agribusiness and Processing businesses on track to deliver record financial results. We are operating our supply chains at close to full capacity and our teams have done an outstanding job in overcoming disruptions relating to weather and COVID to export 7.9 million tonnes of grain year-to-date.
We expect another well above average ECA crop in 2022/23 based on crop development we have seen to date, and a favourable 3-month rainfall outlook. This positive outlook is driving an increase in fourth quarter activity and supporting export volumes, forward contracted grain sales and supply chain margins.
GNC shares are currently up 6% while the ASX 200 is down 0.4% .
The US yield curve, the spread between US 10-Year Treasury bonds and 2-Year Treasury bonds, has inverted.
The inversion is the deepest since 2000.
An inverted yield curve often precedes a recession.
As an explainer by the US Fed noted:
A high 10-year yield signals high expected growth over a 10-year horizon. If the difference between the 10-year yield and 2-year yield is positive, then growth is expected to accelerate. If the difference is negative—that is, if the real yield curve inverts—then growth is expected to decelerate.
Deepest 10-2 yield curve inversion since 2000. A few more basis points lower, and it'll be the deepest inversion since 1981. pic.twitter.com/rlzDhxCV9G
— Lyn Alden (@LynAldenContact) August 9, 2022
Infant formula producer A2 Milk (ASX:A2M) hit a snag in its attempt to import infant milk formula products into the US.
A2 Milk advised that it received notice from the US FDA that the regulator is ‘deferring further consideration of the Company’s request for enforcement discretion to import infant milk formula products into the US.’
To sweeten the news, A2M pointed out the FDA sent similar notices to ‘all pending discretion applicants, indicating that the FDA is deferring any further review at this time of all pending applications.’
Does this indicate America’s baby formula shortage is easing?
A2M, which also trades on the New Zealand stock exchange, saw its shares slide 9% on the NZX.
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