• Local shares closed flat in thin trading ahead of ANZAC day
  • Invocare plunged 10pc after TPG withdrew offer
  • Fortescue reported a 16% drop in quarterly iron ore production

 

Trading volumes were thin and the ASX ended flat on Monday ahead of tomorrow’s ANZAC day holiday.

Mining stocks were the under performers today, with the sector down by 1.5% led by a selloff in iron ore stocks.

Fortescue Metals (ASX:FMG) slipped 3% after reporting a 16% drop in quarterly iron ore production over the 3 months ending in March. The company’s iron ore shipments also fell 6% compared to the December quarter. However, FMG’s shipments for the first nine months of FY23 were at a record 143.1 million tonnes.

This comes as the spot iron ore prices plunged by 6% on Friday to a 5-month low on subdued buying interest from steel mills and an increase in port inventories.

The spot iron ore price has now fallen around 20% since the middle of March, when it was trading around the $US132.70 a tonne level.

Diversified metal miner South 32 (ASX:S32) fell 8% after also announcing cuts to its March quarter production.

Funeral homes stock Invocare (ASX:IVC) was the biggest moving large cap, down by almost 10% after telling the market that TPG Capital withdrew its takeover proposal of $12.65 cash per share.

“The Board remains willing to consider any proposal that represents fair value in the interests of all shareholders,” its release said.

 

Pilbara and Coles next to report

Later this week, Pilbara Minerals (ASX:PLS) and Coles Group (ASX:COL) will hand down their quarterly updates.

Pilbara saw profits soar in the first half of the financial year, thanks to elevated lithium prices.

However, in 2023, lithium prices have fallen, with question marks over EV demand and an end to some government subsidies globally.

“The key will be the increase in production, which should be outlined this week and help offset falling lithium prices,” said eToro analyst, Josh Gilbert.

But Gilbert warns that Pilbara’s profits will still be lower in the second half of the financial year, given the price drop.

Investors will also receive an update later this week from Coles Group, whose shares have outperformed the broader market this year, up 9%.

“With interest rates at decade highs and housing budgets being squeezed, consumers are likely staying at home and spending more in the supermarket, a win for the group,” said Gilbert.

 

Crucial CPI report ahead

The Albanese government has released its long-awaited Defence Strategic Review report, which could see the Royal Australian Navy being reshaped.

“An enhanced lethality surface combatant fleet, that complements a conventionally armed, nuclear-powered submarine fleet, is now essential given our changed strategic circumstances,” said the report.

Meanwhile, the Aussie monthly CPI report will be released on Wednesday.

Expectations are for a reading of 7%, with a focus on services inflation as overseas migration swells.

“After plenty of scrutiny over the last week, Philip Lowe and the RBA board’s next move will be more important than ever, and the latest reading on inflation will be the focus for investors this week,” said Gilbert.

However, Gilbert warns the pause in interest rates by the RBA may be short-lived if this CPI reading comes in hotter than the market expects, as it did in Q4 2022 at 7.8%.

 

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Tech was the best performing sector today, led by Wisetech Global (ASX:WTC) and Afterpay (ASX:SQ2) – with both rising by 2% on no specific news.

 

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