ASX News LIVE | XJO Set for Weak Start Ahead of Jobs Data, Graincorp, MinRes, A2 Milk Feature

The ASX 200 closed down -0.67% at 7,058.4 today, with three of the eleven sectors in the green.

The best-performing sectors today were Utilities (+0.59%) and Staples (+0.38%).

The worst hit sectors today were Energy (-1.19%) and Tech (-1.02%), but Health Care (-1.00%) was not far behind.

Energy stocks followed falling oil prices, which continued their falls over the session. Brent crude is down 0.95% to US$80.41, while WTI crude fell -0.77% to US$76.07.

In other markets, Gold gained 0.16% to hit US$1,963.55, while Bitcoin continued its climb, up 4.96% to US$37,359.59.

AMP Bank is set to launch a new mobile-based digital bank for sole traders and small businesses in a bid to shake up the business banking market.

The new bank, which is expected to hit the market in early 2025, will use technology from UK ‘neobank’ Starling, which has a 7% share of the SME banking market in the UK.

AMP said its initial focus will be on transaction and savings accounts, with lending to be added later. The new bank is targeting a 3% to 6% market share of the $220 billion in deposits held by sole traders and businesses with fewer than 20 employees.

AMP said the new bank would cost $60 million to set up over the next two financial years, which would be absorbed within current cost targets.

Investors reacted negatively to the news, with AMP shares trading down by 1-5.5% to 85 cents. The market was also concerned about additional disclosure, saying the bank’s net interest margin would be a very tight 1.25% in FY23.

Penfolds owners Treasury Wines [ASX:TWE] announced today that it’s buying a 245 hectare vineyard in New Zealand’s Malborough region to secure extra grapes for its Squealing Pig and Matua brands.

Chief supply officer Kerrin Petty said the purchase would increase TWE’s local vineyards in the region from 505 hectares to 750 hectares.

A price was not disclosed for the purchase. The share price is up by 0.50%, trading at $10.77 per share.

The Ferrero Group, known for their delicious Nutella, Kinder Surprise and Xmas favourite Ferrero Rocher, have announced plans to abandon its $70 million hazelnut farm in Southern NSW.

‘Given recent adverse weather conditions, the pilot study found that the region’s climate in the long term is not conducive to hazelnut farming,’ it said.

 

‘Over the duration of the 10-year project hazelnut yields have fallen below expectations making the project, unfortunately, no longer commercially viable‘

The 2,600-hectare property has been listed for sale by the Australian arm of the Italian confectionary company, in a sad decision that the company said, ‘was not made lightly‘.

Ferrero had hoped to produce around 5,000 tonnes from the operation in Narrandera, but the trees that have just reached full maturity are now being pulled out.

The unemployment rate increased to 3.7% in October, a 0.1% increase that puts us at a similar level of employment to July.

Head of labour statistics, Bjorn Jarvis, at the ABS commented on the results today:

‘With employment increasing by 55,000 people, and the number of unemployed people increasing by 28,000, the unemployment rate rose to 3.7% in October,’ he said.

 

‘The large increase in employment in October followed a small increase in September of around 8,000 people.’

 

‘Looking over the past two months, these increases equate to average employment growth of around 31,000 people a month, which is slightly lower than the average growth of 35,000 people a month since October 2022.‘

The participation rate rose by 0.2% to 67% for October as slightly more people looked for work.

But despite this, Mr Jarvis warned that there were signs that the labour market is starting to slow. He pointed to the small gap between the growth rate of hours worked and employment growth.

‘Compared with the labour market just before the start of the COVID-19 pandemic, the growth in hours worked was still greater than employment, at 10% and 9.2%,’ he said.

 

‘However, the gap between them had recently narrowed, having been much higher for most of the period from October 2022 to August 2023.’

 

‘The recent slowdown in the growth of hours worked may suggest that the labour market is starting to slow, following a particularly strong period of growth.‘

 

The ASX 200 fell heavily around 1pm AEST after holding steady after the latest job numbers showed unemployment climbed to 3.7% last month.

The ASX 200 is down -0.61% to 7,062.4, weighed down by Energy (-1.04%) and Real Estate (-1.06%).

Energy stocks fell along with oil prices after a US government report showed rising US crude inventories and further Fed signalling of ‘higher for longer’.

In individual stocks, AMP was the biggest faller at midday, down -14.29% as the company downgraded its margin expectations.

A2 Milk rallied after a morning sell-off despite CEO David Bortolussi’s warning that China’s infant formula market was on track for a double-digit market value decline.

The biggest gainer today was Servcorp Ltd , which is up by 10.52% after its AGM, in which it showed underlying profit up 40% and a rise in free cash.

A2 Milk [ASX:A2M] CEO David Bortolussi warned in the company’s AGM today that China’s infant formula markets were in a steep decline.

The company is heavily reliant on the Chinese market and has been struggling recently with the Chinese consumer slowdown. Mr Bortolussi told shareholders today that the pain has not finished yet, commenting that the market was headed for ‘a further double-digit decline in market value’.

Despite these falls, A2 Milk is still saying it expects a modest revenue growth in line with performance last year.

The company has had a challenging year with ongoing disputes with one of its major suppliers, Synlait Milk [ASX:SM1], which spilled over into the public sphere. The two parties are currently in the middle of arbitration over the disputed long-time exclusivity agreements.

East Coast Australian growers Graincorp [ASX:GNC] released its FY23 results today, showing falling earnings and profits but hinting at better times ahead.

EBITDA came in at $565 million, down from $703 million in FY22.

Net Profit after tax was $250 million, down from $380 million in FY22.

The company maintained its dividend at 54 cps and announced a share buy-back of $50 million.

The fall in profits came from a drop in total grain handled, which reached 37.4mmt in FY23, down from 41.1mmt.

Shares of the company look to be climbing early as the company looks forward with a strong balance sheet of $349 million core cash and opportunities to grow, particularly within oilseed crush volumes, which hit record levels this financial year.

GrainCorp’s Managing Director & CEO Robert Spurway said:

‘GrainCorp delivered another outstanding result in FY23, with both Agribusiness and Processing business segments contributing positively to our performance.’

 

‘The result clearly reflects our disciplined focus on operational performance, the capability of our people and the momentum we continue to build.’

 

‘GrainCorp continues to progress its strategy of strengthening the core of the business through targeted investment into our value chain.’

 

‘We again improved the performance of our oilseed crush, increasing throughput volume for the fifth successive year’

Good morning all, Charlie here

The ASX 200 opened down slightly at -0.08% to 7,100.4. A modest drop for the benchmark, as investors are likely to be wary before the jobs numbers come through later this morning.

Estimates have unemployment ticking up modestly to 3.7%, but we’ll have to wait and see after yesterday’s wage growth ruffled some feathers.

Wages grew 1.3% over the September quarter, the biggest increase in the 26-year history of the ABS statistics. Wages were pushed up by the 5.75% boost for workers on awards and a 15% pay bump for many aged care workers.

‘In the private sector, higher growth was mainly driven by the Fair Work Commission’s annual wage review decision, the application of the Aged Care Work Value case, labour market pressure, and CPI rises being factored into wage and salary review decisions,’ noted the ABS head of price statistics Michelle Marquardt.

The total wage growth for the year is at 4%, so with inflation at 5.4%, real wages still fell overall.

The Aussie dollar rose +0.01% to US65.05 cents, near a three-month high for the AUD.

Meanwhile, on Wall St, stocks continued their rally as the markets continued to celebrate the idea that cooling inflation would keep rates on hold in the US. The gains across the major benchmarks there were modest, with the Dow leading the pack.

Wall Street: Dow +0.47%, Nasdaq +0.067%, S&P 500 +0.16%

Overseas: FTSE +0.62%, STOXX +0.56%, Nikkei +2.52%, SSE +0.55%

US 10-year bond yield +8bsp to 4.53%. Australian 10-year bond yields -6bps to 4.60%.

Gold is down -0.17% today to US$1,959.37. Silver is up 1.64% to US$23.45.

Bitcoin is roaring again, gaining +6% to US$37,661.36. That’s a 24-hour change of US$2,123, while number two, Ethereum gained 3.46% to US$2,050.77

Oil prices fell sharply again overnight. Brent fell -1.71% to US$81.06, while WTI Crude fell -2.15% to US$76.58.

Iron ore continued its strong gains after China announced a 1 trillion yuan (AU$211 billion) of low-cost financing for urban village restoration and affordable housing. Iron ore was up 1.92% to US$133.00.