ASX closes higher as June CPI spurs rate cut expectations
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The news: The Australian sharemarket surged just shy of a new record close amid broad gains following the release of June quarter consumer inflation data at the lower end of the RBA’s target band, strengthening expectations that the central bank will lower the cash rate next month.
The benchmark ASX 200 rose 0.6% to end at 8756.4, just 0.8 off the record close set on 18 July, with six of the 11 sectors finishing in the green.
Consumer staples (+1.3%) was the best performing sector as Coles (+1.7%) and Woolworths (+1.6%) posted gains. Financials (+1.1%) also finished up as Commonwealth Bank (+1.6%), NAB (+0.7%), Westpac (+1.6%) and ANZ (+1.3%) finished higher.
Utilities (-0.8%) was the worst performing sector, led by falls for Origin Energy (-2%).
Biggest movers:
- Polynovo (+7.8%) – The medical device manufacturer expects FY25 EBITDA to be at least three times better than last year’s result. It was the best performer on the ASX 200.
- West African Resources (+3.9%) – Reported a 16% uptick in gold revenue in the June quarter when compared to the preceding quarter.
- Pilbara Minerals (+3%) – Beat production guidance for FY25 as June quarter output jumped 77% on the previous quarter.
- DroneShield (+7.1%) – Posted record revenue of $38.8 million in the June quarter. This is a 9.3% increase quarter on quarter and a 480% increase compared to the same period last year.
- IGO (-7.2%) – CEO Ivan Vella warned of "operational problems and ongoing issues" at its Kwinana lithium hydroxide joint venture. It was the worst performer on the ASX 200.
- Emerald Resources (-6.3%) – Confirmed that June quarter production was below previously issued guidance. Production is expected to trend toward the upper end of guidance in the September and December quarters.
- Appen (-12.8%) – The data services company said that revenue for the full financial year, which for Appen ends in December, is tracking towards the low end of the guidance range.
Deals news:
- Betr Entertainment (0%) – The online bookmaker said it intends to raise the value of its all-scrip takeover offer for rival PointsBet. The Takeovers Panel has issued an interim order to prevent Betr from despatching its proposal.
- The Star Entertainment Group (-4.4%) – Is unlikely to finalise an exit from its interest in Queen's Wharf casino and entertainment complex by the 31 July deadline. If an extension is not granted Star would be obliged to pay its joint venture partners $36.5 million.
Other news:
- Mineral Resources (+2.3%) – Met full-year production and cost guidance as its Onslow Iron joint venture turned cashflow positive and the miner achieved record low mining costs.
- Atlas Arteria (+0.6%) – The toll road operator reported a 10.7% year-on-year increase in proportionate toll revenue for the June quarter.
- Air New Zealand (0%) – Appointed current chief digital officer Nikhil Ravishankar as its next chief executive. He will replace Greg Foran on 20 October.
- Champion Iron (-1.2%) – Posted record sales volume in the June quarter but posted a year-on-year fall in EBITDA.
- Bowen Coking Coal – Appointed voluntary administrators from McGrathNicol Restructuring after being unable to reach an arrangement to pay BUMA Australia and the Queensland Revenue Office. Shares continue to be suspended from trading.
What’s ahead:
- The federal statistical office of Germany will release June quarter gross domestic product data tonight at 6pm.
- Automatic Data Processing will release data for the change in US non-farm employment for July tonight at 10:15pm.
- The US Bureau of Economic Analysis will release an advance estimate of gross domestic product data for the June quarter tonight at 10:30pm.
- The Bank of Canada will make an interest rate decision tonight at 11:45pm.
- The US Federal Reserve will make an interest rate decision tomorrow at 4:00am.
- The Bank of Japan is expected to make an interest rate decision tomorrow.
