by Paul Sanger
ASX trading lower, but off its lows as tech stocks dive in morning trading.
At noon, the S&P/ASX 200 is 0.12 per cent or 8.10 points lower at 7021.70.
The SPI futures are pointing to a fall of 12 points.
Best and worst performers
The best-performing sector is Utilities, up 0.52 per cent. The worst-performing sector is Information Technology, down 3.46 per cent.
The best-performing stock in the S&P/ASX 200 is Imugene (ASX:IMU), trading 12.96 per cent higher at $0.30. It is followed by shares in Coronado Global Res (ASX:CRN) and GrainCorp (ASX:GNC).
The worst-performing stock in the S&P/ASX 200 is St Barbara (ASX:SBM), trading 10.33 per cent lower at $1.08. It is followed by shares in The A2 Milk Company (ASX:A2M)and Computershare (ASX:CPU).
Asia-Pacific shares fell in early trade on Wednesday as investors await inflation data from China and the US. The Nikkei 225 in Japan fell 0.63 per cent, while the Topix index slipped 0.46 per cent. In South Korea, the Kospi dipped 0.54 per cent and the Kosdaq dropped 0.75 per cent. MSCI’s broadest index of Asia-Pacific shares outside of Japan shed 0.22 per cent.
China is set to release inflation data Wednesday. The producer price index for July is expected to rise 4.8 per cent from a year ago, according to a Reuters poll. In June, the PPI increased by 6.1 per cent. Consumer prices are forecast to increase 2.9 per cent compared with the same period in 2021.
In company news, Toyota Motor announced that it would suspend some production operations due to positive Covid cases at work sites. Cathay Pacific and Honda Motor are among the companies reporting earnings on Wednesday.
The Australian yield curve continues to flatten with some segments now inverted. Spread between 3- and 10-year yield has narrowed to just 23 from around 40 bp a week ago. Markets remain concerned about a policy mistake with RBA projected to take the cash rate into restrictive territory above 3.00 per cent at a time when deteriorating consumer sentiment is clouding outlook for consumption.
China CPI inflation is forecast to have risen towards the government’s 3.0 per cent target though pullback in raw materials prices is expected to ease PPI inflation. Some thought the government will tolerate CPI inflation above 3.0 per cent as it looks to support the economy. However, scope for monetary policy easing is considered limited with analysts seeing low probability of additional RRR and/or interest rate cuts.
FT discussed speculation that Masayoshi Son could take SoftBank Group (9984.JP ) private following its record quarterly loss, a pledge of heavy cost-cutting and an hour of public self-criticism during his presentation. Also, fresh signs that SoftBank is preparing to sell key operations such as Fortress and focus more exclusively on its two Vision Funds raised questions among analysts and investor over whether it still needed to be listed.
Reuters reported President Biden signed the CHIPS and Science Act to provide $52.7B in subsidies for US semiconductor production and research and to boost efforts to make the US more competitive with China’s science and technology efforts. Biden touted investments that chip companies are making even though it remains unclear when the Commerce Department will write rules for reviewing grant awards and how long it will take to underwrite projects
US equities finished lower in fairly quiet Tuesday trading as investors navigated a batch of disappointing company reports ahead of a key inflation reading.
Investors are awaiting the latest reading of the July consumer price index, due tomorrow. The report is expected to show a slight slowdown in inflation, thanks in part to a fall in oil prices, which could inform the market about the next steps for the Federal Reserve. The market is expecting the CPI to rise by 0.2 per cent on a monthly basis, or 8.7 per cent year-over-year.
Overnight the S&P 500 fell 0.42 per cent to 4,122.47, while the Nasdaq Composite dropped 1.19 per cent to 12,493.93. The Dow Jones Industrial Average shed 58.13 points, or 0.18 per cent, to close at 32,774.41.
The declines came after chipmaker Micron warned that revenue may fall short of its prior guidance because of “macroeconomic factors and supply chain constraints.” The stock fell more than 3 per cent.
Overall it’s been a rough week for chipmakers. On Monday, weaker-than-expected revenue guidance from Nvidia weighed on the group, and those stocks extended their losses on Tuesday.
The S&P 500 has climbed for three straight weeks, but earnings season has featured demand warnings from executives of major companies.
Across the sectors energy rose while consumer discretionary fell. The worst performing industries were semiconductors, homebuilders, gaming, and travel related companies. Energy, insurance, banks, managed care, steel, food held up better.
Coinbase shares dropped in extended trading on Tuesday after the crypto exchange reported a loss of over $1 billion in the second quarter and missed analysts’ estimates for revenue.
Ford Motor on Tuesday said it is increasing the starting prices of its electric F-150 Lightning pickup due to “significant material cost increases and other factors.”Raw material costs for batteries for electric vehicles more than doubled during the coronavirus pandemic, according to a recent report by consulting and research firm AlixPartners
Company News
iSelect (ASX:ISU) announced today that it has entered into a Scheme Implementation Agreement with Innovation Holdings Australia who currently hold 26.0 per cent of iSelect. Under the proposal Innovation Holdings will acquire all of the shares in iSelect that it does not currently own. The Scheme is subject to certain conditions but if implemented, iSelect shareholders will receive cash consideration of $0.30 per iSelect share. Shares in ISU are currently trading up 75 per cent at 28c.
Meeka Metals (ASX:MEK) has announced a significant new gold discovery. The new results show broad zones of high-grade gold were intersected, at the northern end of the company’s St Anne mine. Meeka’s managing director Tim Davidson said ‘ Pleasingly, these results also demonstrate the significant high-grade potential as we continue to grow the footprint of this large gold system’ . Meeka Metals will present on ShareCafe’s hidden gems webinar this Friday lunchtime. Mek shares are currently trading up 32 per cent at 6.6c.
Mayne Pharma Group (ASX: MYX) today announced that it has entered into an agreement with Catalent (NYSE: CTLT), the global leader in enabling biopharma, cell, gene, and consumer health partners to optimise development, launch, and supply of better patient treatments across multiple modalities, to sell Metrics Contract Services for a total cash consideration of US$475 million. Mayne Pharma will receive approximately US$445 million in net proceeds after transaction costs, restructuring costs and customary closing adjustments. Mayne Pharma’s Chair Mr. Frank Condella said, “I am pleased to announce the sale of Metrics which is a key driver of the Company’s transformation agenda to reposition Mayne Pharma for growth. This transaction unlocks significant value for Mayne Pharma shareholders and creates a leaner and more focused business with financial flexibility to support its strategic priorities. Shares in MYX are currently trading up 7.35 per cent at 36.5c.
Commodities and the dollar
Gold is trading at US$1792.09 an ounce.
Iron ore futures are pointing to a fall of 1.4 per cent.
One Australian dollar is buying 69.61 US cents.
