• The ASX finished flattish on Monday
  • Energy stocks lagged, while Utilities and Real Estate led
  • There’s a host of key releases in Australia this week, including CPI data on Wednesday

 

The ASX 200 closed flattish on Monday with losses in the Energy sector offset by gains in Utilities and Real Estate.

Woodside Energy (ASX:WDS) was down 3% and Santos (ASX:STO) fell almost 2% as crude prices slipped 1% lower on Friday on continuing banking crisis fears, and after US Energy Secretary Granholm said refilling the SPR (strategic reserves) could take years.

“There just isn’t a lot of optimism here for the outlook over the short-term for crude oil, and that has energy traders hesitant to buy this dip,” said Oanda analyst, Edward Moya

Biggest moving large cap today was Lake Resources (ASX:LKE), which fell 11.5% after its non-executive chairman, Stu Crow, dumped $3.9m of his LKE shares in the open market.

Latitude Group (ASX:LFS) fell another 2.5% after giving the market an update of the cyber attack, which is now 42x bigger than initially reported and has become one of the biggest breaches in Australian history.

“As our forensic review continues to progress, we have identified that approximately 7.9 million Australian and New Zealand driver licence numbers were stolen, of which approximately 3.2 million, or 40%, were provided to us in the last 10 years,” said the Latitude release.

“A further approximately 6.1 million records dating back to at least 2005 were also stolen, of which approximately 5.7 million, or 94%, were provided before 2013.”

 

Is ASX about to see rotation into risk?

Last week we saw the 7th straight week of decline for the ASX 200, its worst run for over a decade.

But with the US banking crisis tightening financial conditions, markets now anticipate the Fed Reserve could be done with its jumbo rate hike cycle.

“This has significantly impacted the local market as investors take on more risk with tech stocks, and rotate away from defensive assets that dominate the ASX200,” said Josh Gilbert, market analyst at eToro.

For context, Gilbert explained that the technology sector makes up just 2.7% of the ASX200, whilst financials, one of the worst-performing sectors this year, makes up a massive 28%.

“The likely peaking of interest rates and lower inflation outlook supports risk assets and has also helped boost crypto, with bitcoin soaring 70% this year,” he said.

“Ultimately, this could mean more weakness for the local market as the rotation continues, but the positive is that investors won’t be willing to completely give up their safe haven stocks just yet, with the inflation fight globally still not over.”

 

Key releases in Australia this week

Meanwhile, there will be a host of crucial data releases this week in Australia.

On Wednesday, Aussie Investors will be hoping to see another decline in inflation after January’s reading of 7.4%.

The RBA has stated that inflation has peaked, raising investor hopes that a pause in its tightening cycle is in sight. Expectations are for February’s monthly inflation reading to come in at 7.1%, falling significantly from December’s peak of 8.4%.

“The full effect of the RBA’s ten consecutive hikes are yet to be felt, and the board continues to have a tricky task in walking the fine line between bringing down inflation and not tipping the Australian Economy into recession,” said Gilbert.

However, looking overseas, Gilbert says we can see that it’s not plain sailing to get inflation under control. UK inflation for example is stubbornly high, with all readings since September coming in above 10%.

“The recent overseas banking crisis has also thrown a spanner in the mix for the RBA, but board members quickly reassured consumers this week that banks were unquestionably strong,” added Gilbert.

Investors will also be looking at tomorrow’s retail spending data to see if the economic resilience can continue.

Household spending accounts for around 60% of GDP, and strong sales will be key to Australia’s growth this year, but the follow-through from the RBA’s consecutive rate hikes may dampen consumer spending

“The RBA will be looking towards retail sales and hoping for another slowdown in spending, particularly as their tone has turned dovish in recent weeks,” said Gilbert.

“Ultimately, consumer sales will be patchy throughout 2023, and consumers will more than welcome an end to the RBA’s tightening cycle.”

 

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Funeral homes operator InvoCare (ASX:IVC) rose 1.6% after saying that the $1.8 billion takeover offer at $12.65 per share from TPG bid is too cheap.

Accordingly, the Board of InvoCare has informed TPG that it is not prepared to grant full due diligence access.

Healius (ASX:HLS) was up 1.65% after its largest shareholders, Perpetual and John Wylie’s Tanarra Capital, declined to support Australian Clinical Laboratories (ASX:ACL)’s takeover offer, in effect killing the deal on Sunday.

Healius announced today that it will write to the Takeovers Panel to resolve “deficiencies” in the takeover bid by the much smaller ACL.

Dalrymple Bay Infrastructure (ASX:DBI) climbed 6% on no specific news.

 

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