- The ASX 200 index fell by 1% on Tuesday
- Energy stocks rose as European’s benchmark for natural gas surged 20% overnight
- T. Rowe Price has downgraded Aussie stocks from overweight to neutral
Local shares finished lower by 1% for the second consecutive day on Tuesday.
The moves have tracked similar falls on Wall Street overnight, as the recent bear market rally seems to have skidded to a stop.
The 2Yr vs 10Yr US Treasury spread, often used as a leading indicator of a recession, widened to 30bps ahead of this week’s gathering of global central bankers for an economic symposium at Jackson Hole, Wyoming.
Investors’ focus in that meeting will be on Fed boss Jerome Powell’s speech on Friday (US time), which is expected to provide insights into his thoughts on future interest rate hikes.
Meanwhile, Global T. Rowe Price has moved from overweight to neutral on Australian equities, citing the deterioration of the macro indicators amid rising domestic and global recession risks.
“Recent earning announcements are flagging downgrade risks,” said Thomas Poullaouec, Head of Multi-Asset Solutions APAC at T. Rowe Price.
Poullaouec argues that commodity prices are dropping, while China has yet to provide support needed for iron ore prices to stabilise.
At the same time, higher-than-expected wage increases may create a more entrenched inflationary problem than previously anticipated.
“Given expected higher run rate of inflation going forward, the price-earnings ratio has room to de-rate further,” said Poullaouec.
“Besides, looming inflationary concerns means that the RBA is not yet done with its hiking cycle.”
Poullaouec warns that the next season of earnings will be key to gauge how much consumers can maintain their spending given tighter monetary conditions.
Back to the ASX, the Energy sector was the clear winner out of all 11 sectors today as Europe’s benchmark for natural gas trading surged almost 20% overnight.
This came as Russia’s state-owned energy firm Gazprom said over the weekend it would shut down Europe’s single biggest piece of gas infrastructure (the Nord Stream 1 pipeline) for a three day unscheduled maintenance work from the end of August.
BIG CAP WINNERS
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| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| ALU | Altium Limited | 35.89 | 20% | 1,504,767 | $3,934,869,325 |
| ANN | Ansell Limited | 27.35 | 9% | 1,112,587 | $3,203,878,531 |
| CEN | Contact Energy Ltd | 7.47 | 7% | 13,090 | $1,736,390,908 |
| MND | Monadelphous Group | 12.12 | 6% | 1,116,467 | $1,090,665,908 |
| AKE | Allkem Limited | 13.19 | 6% | 3,928,322 | $7,970,726,075 |
| ABC | Adbri Limited | 2.305 | 4% | 4,009,204 | $1,442,306,897 |
| CWY | Cleanaway Waste Ltd | 2.785 | 4% | 6,007,193 | $5,548,869,471 |
| PLS | Pilbara Min Ltd | 3.28 | 3% | 38,691,037 | $9,436,609,377 |
| KAR | Karoon Energy Ltd | 1.9525 | 3% | 2,103,654 | $1,057,571,742 |
| NHC | New Hope Corporation | 5.12 | 3% | 2,469,095 | $4,145,138,268 |
| WHC | Whitehaven Coal | 7.75 | 3% | 10,981,036 | $7,210,288,256 |
| WAF | West African Res Ltd | 1.325 | 3% | 2,861,744 | $1,317,128,368 |
| SCG | Scentre Grp | 2.85 | 3% | 14,890,739 | $14,429,251,782 |
| DEG | De Grey Mining | 0.9275 | 2% | 2,460,457 | $1,276,654,364 |
| AGL | AGL Energy Limited. | 7.965 | 2% | 1,610,540 | $5,233,973,473 |
| STO | Santos Ltd | 7.565 | 2% | 9,617,188 | $24,796,772,426 |
| WDS | Woodside Energy | 33.77 | 2% | 4,935,692 | $62,715,704,936 |
| CQR | Charter Hall Retail | 4.12 | 2% | 1,021,801 | $2,342,355,324 |
| MP1 | Megaport Limited | 7.94 | 2% | 819,879 | $1,228,710,885 |
Software stock Altium (ASX:ALU) jumped 20% after reporting a revenue increase of 23% to US$220.8 million for the full FY22, beating its guidance range of US$213m to US$217m.
Ansell (ASX:ANN) rose 9% after reporting full year sales of $1.952 billion, a decline of 3.7% on pcp. NPAT dropped 36% to $US158.7 million.
Earnings per share (EPS) fell from 76.8c in FY21 to 55.45c in FY21. However in FY23, Ansell expects EPS to be in the range of US115¢ – US135¢.
BIG CAP LOSERS
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| Code | Name | Price | % Change | Volume | Market Cap |
|---|---|---|---|---|---|
| EDV | Endeavour | 7.28 | -12% | 14,348,951 | $14,811,404,741 |
| HTA | Hutchison | 0.075 | -6% | 616 | $1,085,800,686 |
| TLX | Telix Pharmaceutical | 6.095 | -6% | 2,857,865 | $2,030,827,053 |
| ZIM | Zimplats Holding Ltd | 26.31 | -6% | 2,522 | $3,013,854,172 |
| CCP | Credit Corp Group | 19.75 | -6% | 837,835 | $1,423,799,536 |
| OBL | Omni Bridgeway Ltd | 4.385 | -5% | 238,664 | $1,241,115,275 |
| JDO | Judo Cap Holdings | 1.22 | -5% | 920,544 | $1,420,593,036 |
| BRN | Brainchip Ltd | 0.96 | -4% | 9,199,474 | $1,727,958,955 |
| JHX | James Hardie Indust | 34.27 | -4% | 881,134 | $15,946,453,822 |
| NVX | Novonix Limited | 2.415 | -4% | 2,895,501 | $1,226,433,358 |
| VNT | Ventiaservicesgroup | 2.79 | -4% | 651,291 | $2,489,459,735 |
| AUI | Australian United In | 9.67 | -4% | 85,989 | $1,262,769,430 |
| BKW | Brickworks Limited | 20.64 | -4% | 203,204 | $3,264,694,511 |
| NUF | Nufarm Limited | 5.1 | -4% | 870,636 | $2,018,696,036 |
| IMU | Imugene Limited | 0.25 | -4% | 12,624,659 | $1,525,314,599 |
| EVT | Event Hospitality | 14.91 | -4% | 99,239 | $2,496,918,620 |
Retail and hospitality group Endeavour Group (ASX:EDV) fell 11% after reporting flat revenue of $11.6bn for the year. NPAT was $495m, a 11% rise on pcp.
Looking ahead, Endeavour expects the retail drinks and hospitality markets to continue to return to normal over the course of FY23.