Inflation set to weigh on Coles, AMP & BHP leads ASX rebound, up 1% at noon

Market Reports

by Melissa Darmawan

Australian mining and energy stocks have pulled the local bourse higher after three straight days of declines as a rally in commodity prices and a beat on the nation’s price of imports and exports helped with trader’s sentiment.

After to and fro between different players on AMP (ASX:AMP), the wealth giant is the best performer, soaring 13.9 per cent higher at $1.17 after flagging a capital return from its sale of Collimate Capital's international infrastructure equity business to DigitalBridge for up to $699 million or 8 per cent of assets under management. This means that AMP will no longer demerge its private markets arm which means separation costs are set to be immaterial. Analysts have said that its dividend yield could top 20 per cent in the company’s fiscal 2022 to 2023 years if it pays out the majority of net proceeds from its recent transactions which could hit $2 billion.

Meanwhile, the largest weight on the index BHP Group (ASX:BHP) is having a joy of a day, 3.4 per cent higher at $47.58 while Sandfire Resources (ASX:SFR) has soared 13.5 per cent to $5.90

A 10 per cent rise in shipments from Fortescue Metals (ASX:FMG) for the March quarter has put the fourth largest iron ore miner to raise guidance for its annual exports, sending shares 4.6 per cent higher at $21.02.

Shipments in the three months ending March were 46.5 million tons, up from 42.3 million tons in the same period a year ago attributed to the delivery and ramp up of the Eliwana project and execution of integrated operations, coming in line with estimates of 46 million tons. However, strong volumes and an ongoing focus on cost management were offset by market inflation across key input costs, including diesel, other consumables and labour rates.

This followed updates from BHP Group (ASX:BHP) and Rio Tinto (ASX:RIO) both reporting a fall in iron ore shipments compared with the previous quarter on issues due to labour shortages, delaying projects.

Meanwhile, the worst performer is Silver Lake Resources (ASX:SLR) shares, trading 8.8 per cent lower at $1.82 after the gold and copper miner withdrew its 2022 sales guidance on the same issues reported by BHP and Rio Tinto - staff shortages due to the Covid-19 lockdowns.

Coles (ASX:COL) is on the move, up 0.4 per cent to $18.44 after the supermarket giant posted a strong third quarter.  Gross retail sales of $9.3 billion increased by 3.9 per cent while group sales revenue of $9.1 billion grew by 3.6 per cent compared to the prior period. The chief executive officer noted that price hikes are on the horizon as the supermarket giant are in talks with many suppliers around higher input costs around services like freight and logistics.

In terms of other stocks we are watching, Japanese giant Mitsui & Co has started sounding out potential buyers for its oil and gas joint ventures with Woodside Petroleum (ASX:WPL), fuelling expectations of a potential divestment. Shares in Woodside are trading 0.6 per cent higher to $31.10.

The Star Entertainment Group (ASX:SGR) allegedly underpaid $2.5 million in NSW state taxes in 2020 by failing to properly categorise gamblers as overseas for Australian residents, an inquiry into its suitability to hold a NSW casino licence heard, according to the AFR. Shares are trading 0.6 per cent lower to $3.08.

Hearing implant maker Cochlear (ASX:COH) is sounding out global consolidation opportunities with a deal to acquire Danish competitor Oticon Medical for $170 million (DKK850 million), in a move that if successful would lift its patient base by 75,000 hearing implant recipients. Shares are trading 0.8 per cent lower to $228.82.

At noon, the S&P/ASX 200 is 1 per cent or 76.3 points higher at 7,338.

The SPI futures are pointing to a rise of 72 points.

Best and worst performers

The best-performing sector is Materials, up 2.69 per cent. The worst-performing sector is Communication Services, down 0.01 per cent.

The best-performing stock in the S&P/ASX 200 is AMP (ASX:AMP), trading 13.90 per cent higher at $1.17. It is followed by shares in Sandfire Resources (ASX:SFR) and City Chic Collective (ASX:CCX).

The worst-performing stock in the S&P/ASX 200 is Silver Lake Resources (ASX:SLR), trading 8.75 per cent lower at $1.82. It is followed by shares in Paladin Energy (ASX:PDN) and Tyro Payments (ASX:TYR).

Commodities and the dollar

Gold is trading at US$1882.91 an ounce.
Iron ore is 1.1 per cent higher at US$140.45 a ton.
Iron ore futures are pointing to a rise of 1.94 per cent.
One Australian dollar is buying 71.22 US cents.

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