Magellan puts Guzman up for $140m sale, Westpac earnings beat, BHP falls: ASX tumbles 1.3% at noon

Market Reports

by Melissa Darmawan

Long duration stocks are off the table today while defensive plays like CSL (ASX:CSL), Telstra (ASX:TLS) and energy stocks like Woodside Petroleum (ASX:WPL) are bucking the trend as investors buy into companies that perform well in a high inflation and low growth environment.

At noon, the S&P/ASX 200 is 1.3 per cent or 92.20 points lower at 7113.40. The SPI futures are pointing to a fall of 58 points.

Weighing on investor's sentiment are the US futures pointing to an over 1 per cent dive, renewing recession fears. The major indexes have taken a beating posting at least a five week losing streak. Also the Aussie dollar has fallen 1 per cent to 70.18 cents to the greenback, its lowest point since 31 January as the US dollar continues to rally amid interest rates set to climb, following a strong April jobs report.

Other than healthcare and energy stocks posting a gain of 0.8 per cent and 0.1 per cent, respectively, the local bourse is dragged down by information tech by 3.3 per cent, property at 2.6 per cent then materials.

Despite the index in negative territory, there are several companies rallying. Westpac (ASX:WBC) is up 2.8 per cent after posting a positive earnings beat, PSC Insurance (ASX:PSI) is on the move, up 2.6 per cent to $4.66 after receiving a $880 million offer from AUB Group (ASX:AUB), CSL (ASX:CSL) is up 1.7 per cent to $272.63, Woolworths (ASX:WOW) is up 0.5 per cent to $38.35, and Brainchip (ASX:BRN) is rallying again, soaring 7 per cent to $1.13.

The largest company on the index, BHP Group (ASX:BHP) is trading 1.9 per cent lower to $45.93 amid a tumble in the iron ore price as China's zero-Covid policy stokes concerns.

Despite the gold price closing higher on Friday, the price of the inflation hedge metal posted a third straight week of declines with Northern Star (ASX:NST) and Evolution Mining (ASX:EVN) trading over 2.1 per cent lower each.

News Corp (ASX:NWS) received several price target downgrades, weighing on the share price as it tumbles 10.5 per cent to $23.82 as the worst performer of the session. Macquarie assessed the company’s third quarter results and cited that it came in-line with its own forecasts, however, when the broker compared the results against two other consensus estimates, one was met while the other one was missed, sending the share price lower. Despite an upgrade to earnings per share estimates largely due to lower-than-expected News Media costs, the analyst lowered its target price by 10 per cent to $45 and retained its outperform rating.

Here is Lauren with the top headlines

Westpac (ASX:WBC) reported first half cash earnings of $3.1 billion versus the Bloomberg consensus of $2.9 billion, a nice beat. Statutory profit is 5 per cent weaker at $3.3 billion compared to the prior corresponding period. The nation’s oldest bank is set to pay an interim franked dividend of 61 cents per share on 25 June, up from the 58 cents payout in the prior period. Shares are trading 2.8 per cent higher at $24.50.

Magellan Financial (ASX:MFG) is set to sell its 11.6 per cent stake in Mexican fast food chain Guzman Y Gomez to a Barrenjoey entity, with the intention of seeding an investment trust for $140 million. Magellan expects to record a pre-tax profit on the sale of $34 million in FY22, while the upfront sale price represents a 36.3 per cent premium to Magellan’s entry price in January last year. Magellan said the funds will be used to support its ongoing “capital management initiatives.” Shares are trading 5.7 per cent lower at $16.26.

UK insurance broker Tysers has received a $880 million offer from AUB Group (ASX:AUB) and unveiled a $350 million equity raising to fund the deal. In other takeover news, AUB is on a roll with another deal that they’ve embarked with PSC Insurance (ASX:PSI). The duo is set to acquire a 50 per cent stake in Tysers’ UK Retail division with both transactions set to increase the AUB’s global footprint. Shares in AUB Group are trading 1.3 per cent lower at $22.06, while PSC Insurance (ASX:PSI) are trading 2.6 per cent higher at $4.66.

TPG Telecom (ASX:TPG) is set to sell its mobile tower and rooftop infrastructure to OMERS Infrastructure Management for an enterprise value of $950 million. TPG anticipates that the transaction will deliver net cash proceeds of around $890 million. Shares last traded at $5.57.

Suncorp’s (ASX:SUN) home lending portfolio during the March quarter grew 1.7 per cent, with total lodgements 21 per cent higher than the second quarter of FY22 driven by consistent competitive offering and improved turnaround times. Business lending grew 0.8 per cent, while commercial lending growth was $122 million. Shares are trading 0.4 per cent lower at $11.26.

BetMakers Technology (ASX:BET) announced that Fixed Odds betting on Thoroughbred Racing has launched in New Jersey under the landmark legislation passed on June 21 last year. The company will continue to engage with existing US online sportsbook operators looking to include Horse Racing as a part of their wagering offering. Shares are trading 3.1 per cent lower at $0.48.

Oceania Healthcare (ASX:OCA) is set to acquire two NZ-based retirement villages Remuera Rise and Bream Bay for NZ$57 million. Oceania has also entered into an option agreement to acquire 6.7 hectares of greenfield development land adjacent to Bream Bay Village. Oceania said it’s committed to providing critical infrastructure for New Zealand’s ageing population. Shares are flat at $0.88.

Viva Energy (ASX:VEA) said group volumes during the March quarter rose 9 per cent from the same period a year ago, driven by strong diesel sales within the commercial businesses. Its retail fuel sales were impacted by reduced mobility from the Omicron variant and flooding events across NSW and Queensland, although demand is showing signs of recovery as CBD workers return to offices. Shares are trading 0.4 per cent lower at $2.73.

What else is on watch today?

JPMorgan cut both Charter Hall Long Wale REIT (ASX:CLW) to neutral with a price target of $5.20, with shares down 1.6 per cent to $4.83, and GPT Group (ASX:GPT) to underweight with a price target of $5.20, with shares down 2.4 per cent to $4.82.

Morgan Stanley cut Centuria Office REIT (ASX:COF) equal weight from overweight, with shares trading 4.7 per cent lower at $2.03.

REA Group (ASX:REA) received two broker upgrades, one from Morgans, an add from hold and Credit Suisse, raised to outperform from neutral. Shares are trading 4.9 per cent lower to $106.67.

Macquarie Group (ASX:MQG) also received two, Morgans raised to add from hold but Credit Suisse cut to an underperform from neutral. Shares are trading 3.9 per cent to $179.70.

Those keen to find out the next major buyout proposal in the Australian market should pay close attention to the $8.7bn Medibank Private (ASX:MPL), according to The Australian. Shares are down 0.9 per cent to $3.22.

AGL Energy (ASX:AGL), following Mike Cannon-Brookes’ being the largest stakeholder in the company and his campaign around the energy company’s next moves. Shares are up 0.1 per cent to $8.36.

Best and worst performers

The best-performing sector is health care, up 0.8 per cent. The worst-performing sector is information technology, down 3.2 per cent.

The best-performing stock in the S&P/ASX 200 is Domino Pizza Enterprises (ASX:DMP), trading 2.9 per cent higher at $68.26. It is followed by shares in Westpac Banking Corporation (ASX:WBC) and PolyNovo (ASX:PNV).

The worst-performing stock in the S&P/ASX 200 is News Corporation (ASX:NWS), trading 10.2 per cent lower at $23.89. It is followed by shares in Novonix (ASX:NVX) and Liontown Resources (ASX:LTR).

Commodities and the dollar

Gold is trading at US$1877.34 an ounce.
Iron ore is 4.7 per cent lower at US$139.00 a ton.
Iron ore futures are pointing to a fall of 6.1 per cent.
One Australian dollar is buying 70.18 US cents.

Source: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics

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