by Peter Milios
On the back of gains from Communication Services, Information Technology and Healthcare, at noon, the S&P/ASX 200 is 0.40 per cent higher at 7,447.3.
Challenger rose 5 per cent after confirming its guidance, while CSL rose 1.7 per cent despite a drop in profits. James Hardie Industries fell 3.4 per cent after cutting its full-year earnings guidance.
The Star and Ansell were the biggest laggards, down over 8.8 per cent, due to falling sales and lower earnings per share guidance.
Santos saw a small gain of 0.1 per cent but had to flag a $469 million impairment.
Seven West Media fell 2.2 per cent after opting not to pay a dividend despite posting a profit.
Temple & Webster saw a large decline of 21.4 per cent due to a 12 per cent drop in sales for the online homewares outlet and the absence of a dividend.
The SPI futures are pointing to a rise of 23 points.
Best and worst performers
The best-performing sector is Health Care, up 1.34 per cent. The worst-performing sector is Industrials, down 0.23 per cent.
The best-performing large cap is WiseTech Global (ASX:WTC), trading 2.63 per cent higher at $56.20. It is followed by shares in Lynas Rare Earths (ASX:LYC) and Pilbara Minerals (ASX:PLS).
The worst-performing large cap is Insurance Australia Group (ASX:IAG), trading 3.76 per cent lower at $4.735. It is followed by shares in James Hardie Industries plc (ASX:JHX) and Aurizon Holdings (ASX:AZJ).
Asian news
Asia-Pacific shares are to trade higher as investors await the release of the U.S. consumer price index report, which will shape the Federal Reserve’s path ahead. The Nikkei 225 rose 0.86 per cent and the Topix climbed 0.9 per cent, and the Japanese yen stood at 132.33 against the U.S. dollar ahead of the Japanese government’s expected nomination of its next Bank of Japan governor. Nikkei reported last week that Kazuo Ueda will be nominated for the post. South Korea’s Kospi started the day 1 per cent higher, while the Kosdaq also gained 0.78 per cent.
Latest NY Fed survey shows little change in consumer inflation expectations
January’s Survey of Consumer Expectations from the NY Fed found median year-ahead inflation expectations remained unchanged m/m at 5.0 per cent while the three-year median dipped to 2.7 per cent (from 2.9 per cent) and the five-year rose to 2.5 per cent (from 2.4 per cent). Median year-ahead housing price expectations dropped to 1.1 per cent from prior 1.3 per cent, while gas- and food-price forecasts both increased. Year-ahead earnings growth expectations remained unchanged at 3.0 per cent. On the labour front, expectations the respondent will be unemployed a year from now rose to 41.2 per cent from the prior 40.8 per cent (shift most pronounced among higher educated/higher earning respondents) though the mean perceived probability of finding a new job increased marginally. Elsewhere, the median expected year-ahead household income growth rate dropped by 1.3 per cent to 3.3 per cent, the largest single-month drop in series history. Household spending-growth expectations also dropped, to 5.7 per cent from 5.9 per cent in December. More respondents expect to be worse off a year from now.
Where things stand ahead of CPI
Market in waiting mode for January CPI data out tomorrow. Disinflation momentum narrative, which has been a widely cited driver of the early 2023 strength, has come under some recent scrutiny, particularly with the bounce in used-car prices. Five-year break-even has already risen ~20 bp in just the last couple of weeks. At the same time, Fed’s higher-for-longer and upside peak rate risk messaging supported by hot labour market data. Also some concerns that the sentiment and positioning tailwind may be waning. In addition, earnings and guidance metrics continue to underwhelm and strategists continue to suggest that 2023 earnings estimates have more room to come down despite the outsized cuts already seen. Bullish talking points still revolve around the likely near-term Fed move to the sidelines, expectations for some near-term relief on sticky core services inflation, earnings cushions from cost-cutting actions and dampened input price and supply chain pressures, consumer resilience and pickup in soft/no landing expectations (both underpinned by a tight labour market) and the accelerated China reopening.
January CPI preview
January CPI out at 08:30 ET on Tuesday. Headline CPI expected to increase 0.5 per cent m/m following a 0.1 per cent decline in December, though y/y rate growth was seen decelerating to 6.2 per cent from 6.5 per cent. Core CPI expected to increase 0.4 per cent m/m following a 0.3 per cent gain in December, leaving the y/y rate of growth at 5.5 per cent vs 5.7 per cent. Rebound in headline inflation chalked up to higher energy prices and continued upward pressure on food prices. Previews noted an uptick in core inflation, a function of less drag from core goods than in recent months. There seemed to be an outsized focus on used-vehicle prices, where recent declines have been a key input for the disinflation momentum narrative. While a number of firms highlighted expectations for another (albeit smaller) drag, they also discussed how the increase in the Manheim Used Vehicle Value Index signals a reversal ahead. Shelter another area of focus with some debate about whether new rental pricing will start offsetting continued upward pressure on lease renewals or if this dynamic will come with a bit longer lag. Despite the debate, shelter is seen driving another month of sticky core services inflation. Seasonality flagged as a potential driver of a hotter January inflation print, though some doubt it will have much impact on Fed policy expectations.
Company news
Elementos (ASX:ELT) announced a 2023 Mineral Resource Estimate update at its Oropesa Tin Project in Spain. The 2023 MRE increased by 4 per cent to 19.6 million tonnes at 0.39 per cent Tin and contained tin increased by more than 12 per cent to 71.8 thousand tonnes. In response, Elementos Managing Director Joe David stated, “We achieved our main aim of upgrading all the Inferred Resources located within the 2022 Optimisation Study US$30,000 pit shell, to Measured and Indicated resources.” Shares are trading 2.48 per cent higher at 31 cents at noon.
Falcon Metals (ASX:FAL) has announced multiple high-grade gold intercepts at the Ironbark East project. In response, Falcon Metals’ Managing Director Tim Markwell said, “The results at Ironbark confirm the potential of diorite to host economic zones of mineralisation, especially with the intersection of a new zone at Ironbark Central announced earlier this month.” Shares are trading 28.6 per cent higher at 27 cents.
Matsa Resources (ASX:MAT) has announced excellent preliminary lithium results at their project in Western Thailand. In response, Matsa Executive Chairman Mr Paul Poli commented, “We’ve only just started to scratch the surface here and with our discovery that makes three new discoveries in quick succession. We really don’t know at this point how big these discoveries could be.” Shares are trading 14.3 per cent higher at 4 cents at noon.
Antisense Therapeutics (ASX:ANP) has received regulatory approval from the Turkish Medicines and Medical Device Agency to conduct its phase 2b Duchenne muscular dystrophy clinical trial. In response, Professor Thomas Voit commented, “This is great news not only for the prospects of our Phase IIb trial but also for the Duchenne patients who remain in great need of effective and safe therapies.” Shares are trading 9.4 per cent higher at 10.5 cents at noon.
Radiopharm Theranostics (ASX:RAD), a developer of a world-class platform of radiopharmaceutical products for both diagnostic and therapeutic uses, today announced the initiation of the process to obtain a secondary listing on the Nasdaq Capital Market. “We are confident that obtaining a listing on Nasdaq will complement our loyal existing Australian shareholder base by expanding Radiopharm’s access to investors globally, and thereby driving increased shareholder value with enhanced liquidity for all shareholders,” said Riccardo Canevari, CEO and Managing Director of Radiopharm Theranostics. Shares are trading 7.7 per cent higher at 14 cents at noon.
Commodities and the dollar
Gold is trading at US$1782.70 an ounce.
Iron ore is 3.4 per cent lower at US$121.85 a tonne.
Iron ore futures are pointing to a 1.2 per cent fall.
One Australian dollar is buying 69.67 US cents.
