Inflation up more than expected, global markets down on Trump tweet: Aus shares 0.3% lower at noon

Market Reports

by Jessica Amir

The Australian share market has erased yesterday’s 0.3 per cent gain, while the Australian dollar has continued to fall and is trading around 68.74 US cents.

Wall Street and European stocks closed lower after US President Donald Trump went on a Twitter rampage saying China is ripping off the USA, “even bigger and better than ever before….if and & when I win, the deal that they get will be much tougher than what we are negotiating now…or deal at all. We have all the cards, our past leaders never got it”.

FOMC meets on Wednesday and Thursday in the US, and markets have priced in a rate cut of 25 basis points (0.25 per cent). Some economists are expecting a 50-basis point cut (0.5 per cent). Markets won’t react positively if something else happens or if the minutes retract from cutting the rate by 100 basis points over the next 12 months.

The S&P/ASX 200 index is 0.3 per cent or 19 points at 6,826 points at noon. O the futures market the SPI is 0.3 per cent or 19 points lower, suggesting another drop. 

Local economic news

Inflation rose more than expected on a quarterly basis, rising 0.6 per cent in the June quarter, versus the consensus expectation of a 0.5 per cent rise in the consumer price index (CPI). The prior reading was flat in the March quarter 2019, according to the ABS. 

As a result, on a yearly basis, CPI rose more than expected, up 1.6 per cent, beating the consensus 1.5 per cent lift year-on-year expected. The prior reading was a 1.3 per cent rise.

Company news

Adelaide Brighton Limited (ASX:ABC) has revised its earnings guidance for 2019, taking its underlying net profit after tax (excluding property) for the full year to 31 December 2019 to between $120-130 million. It comes on the back of the residential and civil construction markets continuing to slow, competitive pressures in QLD and SA, the cost of raw material rising and the cancellations of import orders. It’s expecting a non-cash impairment of no more than $100 million for the six months to 30 June 2019 (5 per cent of Adelaide Brighton’s assets) Shares in Adelaide Brighton Limited (ASX:ABC) are trading 16.4 per cent lower at $3.61 at noon.

Buy now, pay later company, Splitit Payments Ltd (ASX:SPT), advised its customers have increased 228 per cent in the second quarter of the calendar year to 509 customers. While also compared to last year and its active merchants have risen from over 100 per cent to 509 merchants. Shares in Splitit Payments Ltd (ASX:SPT), are trading 3.2 per cent lower at $0.60 at noon.

Children’s smartwatch company, MGM Wireless (ASX:MWR) has signed its first UK SPACETALK Sales Agreement with a leading TV and multi-channel retailer QVC UK. Sales are expected to kick off in August, during school holidays and the back for school period. The retailer will provide TV and other marketing support. Further UK retail agreement will be announced in the coming weeks. Shares in MGM Wireless Limited (ASX:MWR) are trading 3.8 per cent higher at $3.58 at noon.

Best and worst performers

The best-performing sector is S&P/ASX Energy, adding 0.8 per cent, followed by Staples, while the worst performing sector is S&P/ASX Utilities, shedding 1.4 per cent, followed by Discretionary and Financials follow.

The best performing stock in the S&P/ASX 200 is Orica Limited (ASX:ORI), rising 4.03 per cent to $21.95, followed by shares in Lynas Corporation Limited (ASX:LYC) and IPH (ASX:IPH).

The worst performing stock in the S&P/ASX 200 is Adelaide Brighton Limited (ASX:ABC) ,dropping 16.4 per cent to $3.61, followed by shares in CYBG (ASX:CYB) and Boral Limited. (ASX:BLD).

Asian markets

Japan’s Nikkei has lost 0.8 per cent, Hong Kong’s Hang Seng has shed 1 per cent and the Shanghai Composite has lost 0.4 per cent.

Commodities and the dollar

Gold is trading at US$1,428 an ounce.
Iron ore price rose 1.4 per cent to US$119.61
Iron ore futures are pointing to a rise of 1.96 per cent.
One Australian dollar is buying 68.85 US cents.

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