ASX Large Caps: Shares pare losses after soft inflation, A2 Milk perplexed at supplier’s guidance

• The ASX 200 pared losses after inflation softened
• MinRes dropped 9% after slashing full-year production guidance
• A2 Milk perplexed at Synlait’s guidance

The ASX opened 0.5% lower in the morning but soon pared losses and finished flat after the release of the long awaited CPI report.

According the ABS report, the headline inflation figure was 7%, which is slightly higher than the expected 6.9%, but came well below the 7.8% read from last quarter.

Trimmed mean inflation, the RBA’s preferred CPI gauge, slowed to 6.6% from 6.9% which was slightly softer than expectations of 6.7%.

The numbers further support the argument that inflation has peaked, causing the market to react positively.

“That said, the headline inflation figure is still high, and higher rates will be with us for some time,” said Dylan Zhang, ASX Equities Analyst at online brokerage platform, Stake.

“Last week’s unemployment data, which showed that job growth was well above expectations, means there is arguably still a case for the RBA to hike rates.”

Zhang said the RBA has been increasingly dovish, and the 50% drop in First Republic Bank stock overnight, suggests fears of a banking crisis could be reignited.

“Based on today’s market reaction, it seems that investors are banking on another pause in May,” he added.

MinRes slashes production guidance

On the ASX, Miners weighed on the bourse today, while Energy and Industrials led.

Mineral Resources (ASX:MIN) tumbled almost 10% after saying that it was hit by delays at the Mount Marion lithium expansion project.

MinRes slashed slashed its full-year production guidance for its core mining services division as new contracts are harder to come by.

Most lithium stocks were sold off today after MinRes’ announcement.

Major iron ore producers also fell after a note from Citi analysts said they were bearish on iron ore prices, citing continued lacklustre Chinese demand.

Fortescue (ASX:FMG) fell almost 2%, while Bluescope Steel (ASX:BSL) slipped 4%.

BIG CAP WINNERS

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Stockland (ASX:SGP) rose 3% after reporting strong operational metrics in Q3 across its commercial property portfolio, with 98% rent collection for 3Q23 and high occupancy levels maintained. The company also said construction is progressing on M_Park Stage 1 (NSW), in partnership with Ivanhoé Cambridge, with an expected end value of over $700m.

Core Lithium (ASX:CXO) rose 2% after providing the market an update for Q3. CXO said construction of the Dense Media Separation (DMS) plant at Finniss was completed during the quarter. First concentrate production was achieved in February 2023, and a maiden 3,500 tonne spodumene concentrate parcel was produced and transported to Darwin port in March and early April. Full mining activities also resumed at Grants open pit following wet weather interruptions.

BIG CAP LOSERS

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A2 Milk (ASX:A2M) slipped 4% after telling the market that it was “surprised” by the size of a profit downgrade announced by its contract supplier Synlait Milk. Synlait crashed 25% after guiding the market to FY23 net profit after tax (NPAT) range to between a net loss of($5) million to a net profit of $5 million.