by Peter Milios
The Reserve Bank of Australia has revised its inflation forecasts, stating that the rapidly rising prices in the country have probably peaked. The central bank upgraded its near-term inflation forecasts due to a strong December quarter Consumer Price Index (CPI) and higher expected wages growth.
The RBA did however, emphasise the need for multiple interest rate increases to ensure high inflation is temporary and reiterated its hawkish statement from earlier in the week.
At noon, the S&P/ASX 200 is 0.57 per cent lower at 7,447.6.
The SPI futures are pointing to a fall of 42 points.
Best and worst performers
The best-performing sector is Consumer Staples, up 0.45 per cent. The worst-performing sector is Information Technology, down 1.83 per cent.
The best-performing large cap is Treasury Wine Estates (ASX:TWE), trading 1.63 per cent higher at $14.38. It is followed by shares in Insurance Australia Group (ASX:IAG) and Endeavour Group (ASX:EDV).
The worst-performing large cap is New Hope Corporation (ASX:NHC), trading 7.75 per cent lower at $5.36. It is followed by shares in Yancoal Australia (ASX:YAL) and Whitehaven Coal (ASX:WHC).
Asian news
Asia-Pacific markets traded mixed on Friday, following moves on Wall Street and ahead of China’s inflation data. Economists polled by Reuters are expecting to see core prices in China rise by 2.2 per cent on an annualized basis. The Nikkei 225 rose 0.1 per cent while the Topix shed 0.23 per cent. The Kospi in South Korea fell 0.76 per cent and the Kosdaq also inched 0.43 per cent lower.
Stocks fail to hold on to early bounce attempt
Not much behind Thursday’s weakness as a selloff through the session reversed the gains from right after the open. Treasuries turned into a headwind, reversing an earlier rally after today’s 30Y auction saw the biggest tail since 2021 (ZH). Yield curve signalling reflected more recession fears, with the 2Y/10Y spread hitting its most inverted point since the early 1980s (Bloomberg). There has also been more focus on the waning tailwind from seasonality and positioning, with Bloomberg noting the market now closest to neutral positioning since Q2-22 after cutting $300B of bearish bets. There wasn’t much behind the early gains either, which was tabbed to factors including thoughts around artificially-inflated payrolls print, Powell’s acknowledgement that data dependence can work in both directions, corporate cost-cutting actions helping offset underwhelming earnings and guidance metrics. Also some positioning and sentiment tailwinds seen in the latest AAII survey, which showed investors net bullish for the first time in almost a year, and the most bullish since Nov-21. JPMorgan also pointed out net flows to TMT and Consumer Discretionary still have plenty of room to turn more positive over the next few months.
Disney outlines restructuring plans
Disney fiscal Q1 results better than expected with Parks the widely discussed standout. Also noted Parks momentum has continued into the Mar Q. DTC losses narrowed and sub performance largely in line. However, the bulk of the focus has been on the strategic priorities outlined by CEO Iger amid his return to the company. New organisation structure includes three key segments: Disney Entertainment, ESPN and Disney Parks, Experiences and Products. Puts control back in the hands of creative executives. Company stressed it is not looking to sell ESPN. Efficiency a key priority as the company announced $5.5B in cost cuts, with $3B from content and $2.5B from non-content. Also talked about greater sports cost discipline. As part of the cost savings initiative, it announced plans to reduce its workforce by 7K, or 3 per cent. Reiterated FY23 guidance for revenue and OI growth in the high-single-digits. Also reiterated expectations for Disney+ to achieve profitability in late FY24 though no longer providing long-term sub targets. Expects to be able to reinstate a modest dividend by the end of calendar 2023. Early Street takeaways seemed positive on scale and design of restructuring and cushion from Parks.
Company news
Consolidated Zinc (ASX:CZL) has entered into a binding agreement with Impact Silver Corp. to sell its Plomosas Project in Mexico. In response, Brad Marwood, Executive Chairman of the company, stated, “The Proposed Transaction presents a good outcome for shareholders as we will realise sufficient cash from the sale of the Plomosas Project to fund the planned exploration in Western Australia.” Shares are currently trading 32.4per cent higher at 2.3 cents.
Riversgold (ASX:RGL) has announced that Lithium drilling will commence imminently at their project. In response, Julian Ford, Riversgold’s CEO, commented: “The Earl Grey Prospect’s attraction lies in its proximity to the existing orebody currently being mined by SQM and Wesfarmers. The widths and tenor of the mineralised pegmatites at both Earl Grey and Bounty would be very attractive in today’s lithium market.” Shares are trading 4 per cent higher at 2.6 cents.
Arovella Therapeutics (ASX:ALA) has announced that they have advanced to the next phase of testing as part of their research collaboration with Imugene. In response, Arovella’s CEO and MD, Dr Michael Baker, commented: “We are pleased by the first set of data and delighted to continue the partnership with Imugene. Combining the two platforms made sense scientifically and seeing this play out in practice is exciting, given the impact this combination of therapeutics could have in solid tumours.” Shares are trading 18.8 per cent higher at 3.8 cents.
Commodities and the dollar
Gold is trading at US$1782.70 an ounce.
Iron ore is 2.1 per cent higher at US$125.50 a tonne.
Iron ore futures are pointing to a 0.8 per cent rise.
One Australian dollar is buying 69.35 US cents.
