• ASX erased yesterday’s gains on Fed chair Powell’s hawkish tilt
  • The RBA has revised its inflation target upward
  • Job seekers’ services stock APM was worst large cap after issuing a warning

 

The ASX erased yesterday’s gains, down by -0.5% on Friday. For the week, the benchmark ASX 200 index closed flattish.

The local market was on edge after a speech by Fed chair Jerome Powell overnight rattled stocks on Wall Street.

Speaking in Washington D.C., Powell poured cold water on market bulls after saying he would raise rates if the data called for it. According to the CME Fed Watch Tool, markets see only a 44% chance the Fed cuts rates by May.

On the ASX today, stocks fell across all sectors, with Financials and Utilities being the worst performers.

Lithium stocks like Pilbara Minerals (ASX:PLS) and Allkem (ASX:AKE) also fell, but Morningstar analyst Seth Goldstein said he was bullish  on lithium prices despite forecasts for continued price declines.

“We remain bullish on lithium over the long term. While spot prices have fallen in the second half of the year, we think prices will stabilise heading into 2024, likely at around US$20,000 per metric ton,” he said.

Market darling Neuren Pharma (ASX:NEU) was one of the best large caps todat, up 6% on no specific news.

The Aussie dollar fell below US64c once again to trade at US63.64c.

Meanwhile, the RBA has today published its quarterly Monetary Policy Statement where it revised its inflation outlook.

According to the report, headline inflation is expected to slow to 4.5% by the end of 2023, up from the previous forecast of 3.9%, and will remain sticky in 2024 before easing back to 3% by mid-2025.

Regionally, major Asian stock markets were mostly under pressure. In China, the focus turned to Industrial & Commercial Bank of China following a ransomware attack that disrupted equities-clearing activities.

 

BIG CAP WINNERS

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Contact Energy (ASX:CEN) was up 2.5% after letting the market know that it was working through a range of commissioning issues at its Tauhara geothermal development, including the remediation of underperforming steam-field valves and liquid handling systems, and the implications of a steam hammer event.

“Given the range of commissioning issues identified, some elements of the steam separation plant will require further design and modification. This work will have a consequential impact on the commissioning timeline previously communicated,” the release said.

Contact now expects to have the plant online in Q3 2024 (from Q1 2024) at least at the initial design capacity of 152MW, and is targeting the full planned output of 174MW at the plant’s first planned outage following further optimisation and plant modifications.

 

BIG CAP LOSERS

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Job seekers and training services provider, APM Human Services (ASX:APM), was the worst performing large cap today, down 20% after warning the company was operating in a low-unemployment world, resulting in lower flow into employment programs particularly impacting Australia and the UK.

As a result, APM says it has no major contracts due for renewal in FY24 or FY25. The first half will also be impacted by higher tax and interest costs as compared to the pcp.

News Corp (ASX:NWS) dropped slightly after reporting Q1 revenues of $2.50 billion, a 1% increase compared to $2.48 billion in the prior year, driven by growth at the Book Publishing and Dow Jones segments. Net income in the quarter was $58 million, compared to net income of $66 million in the prior year.

REA Group (ASX:REA) was down -2.5% despite reporting a 12% increase in Q1 revenue (vs pcp) to $341m. The company’s free cash flow increased by 13% in the quarter to $64m.

“Our strong Australian performance demonstrates the value of our premium products in a strengthening market. We were delighted that REA India also continued its rapid growth in both revenue and audience,” said REA CEO, Owen Wilson.

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