• The ASX is poised to open lower on Wednesday as Wall Street tumbles
  • US debt ceiling negotiations have stalled
  • Australian stock dividends are failing to keep pace with global trend – report

 

Aussie shares are set to open lower this morning as deadline looms on a potential US default. At 8am AEST, the ASX 200 index was pointing down by -0.4%.

Overnight, Wall Street was rattled on the lack of result from the US debt ceiling negotiations – with the S&P 500 and Nasdaq falling by over 1% each.

At the end of the closed-doors talk, Republican House speaker Kevin McCarthy reportedly said that “we are nowhere near a deal yet”, only hours after saying “I think, at the end of the day, we can find common ground.”

Andrew Canobi, director and portfolio manager Franklin Templeton Fixed Income, said that Australia did have a debt limit between 2007 and 2013 introduced by the then Labor Government under Kevin Rudd, first set at $75bn.

“It was increased to $200bn in 2009, $250bn in 2011, $300bn in 2013, and junked altogether later in 2013 by the then Liberal Government under Tony Abbott,” Canobi said.

To stock news where Zoom Video Communications, fell more than 7% despite beating forecasts for Q1 and raising its guidance.

Yelp Inc rose 5% after activist investor TCS Capital confirmed its stake in the company.

Netflix fell 2% after saying that it was cracking down on password sharing. Users in Australia looking to share their passwords are also being asked to pay more.

 

ASX dividend payouts are falling behind

A report by Janus Henderson shows that Australian stock dividends are failing to keep pace with global trend, as the end of the mining boom normalises payouts.

The research shows that Q1 Australian dividends have slumped 6.6% on a headline basis to $27.9 billion, as poorer commodity prices and variable dividend policies drive mining payouts lower.

The heavy concentration of miners in Australia’s share market played a significant role in the overall result.

The world’s largest dividend payer in 2022, BHP, cut its Q1 dividend, as did rival miner Fortescue Metals. Similarly, Rio Tinto has sharply cut its dividend for the second quarter.

Despite a strong performance from the Commonwealth Bank – which lifted its payout by 20% – the impact of BHP and Fortescue’s lower dividends was too large to offset in an otherwise seasonally quiet quarter for Australian dividends.

In the US meanwhile, growth in dividends was 8.3% once generous one-off special dividends were included, taking the US total to a record US$153.4bn.

 

In other markets …

Crude prices lifted 2.5%, with WTI trading at US$73.81 a barrel.

“Energy traders have quickly learned that when it comes to oil prices, you ‘Don’t fight the Saudis’ as they will do whatever it takes to defend prices,” said Oanda analyst, Edward Moya.

Moya said the Saudis are currently not comfortable with oil near the low-$70s, and they will likely support further production cuts if it looks like oil prices could be heading back to the mid-$60s.

Gold was up +0.3% to US$1,975.77 an ounce.

Gold is lacking direction as investors digest a debt deal impasse, but what’s further complicating the gold price is that US economic data is showing that the service sector remains strong, says Moya.

Bitcoin meanwhile was up +1% in the last 24 hours to US$27,198.

 

5 ASX small caps to watch today

Plenti Group (ASX:PLT)
Plenti reported record loan portfolio of $1.8 billion for the full year, up 36% on prior year. The company also reported record loan originations of $1.1 billion, up 3% on prior year, and record revenue of $143 million, up 62% on prior year. Additionally, Plenti reported record Cash NPAT of $4.5 million, up $4.0 million on prior year. The company expects robust full year Cash NPAT growth to be achieved in FY24.

Oceania Healthcare (ASX:OCA)
Oceania announced unaudited Underlying EBITDA of $80m for the full year, a 5% increase on the pcp. Total assets increased during the year by $347m to $2.5b, which includes the acquisitions of Remuera Rise and Bream Bay Village. The company declared final dividend of 1.3 cents per share (not imputed).

EROAD (ASX:ERD)
For the full year, normalised revenue was NZ$165.3m, above the guidance range of $159m to $164m. EBIT improved from a loss of $7.2m in FY22 to a profit of $1.7m, reflecting the recognition of one-off acquisition revenue and integration costs. Annualised Monthly Recurring Revenue has increased by $19.1m (14.2%).

Toro Energy (ASX:TOE)
Drilling has continued to unlock potential scale of the massive nickel sulphide district in WA. High-grade Ni-sulphide mineralisation at Dimma extended to 160m down- dip and remains open at depth. Hand-held spot analysis by portable XRF (hh-pXRF) suggests that Ni grades within the massive Ni-sulphide range between 1.5 and 3.4% Ni.

Tesoro Gold (ASX:TSO)
Surface mapping and sampling results have confirmed continuous gold anomalism within a highly prospective fault corridor extending >10km north from the Ternera Gold Deposit. Assays returned include 18.00m @ 1.59g/t Au, and 66.00m @ 0.32g/t Au.

 

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