The latest market news, commentary and strategy by Adrian Rowney
5 Things that Grabbed my Attention
1. European Natural GAS futures spiked 20% on the back of potential strike action in Australia by Woodside and Chevron workers....That just demonstrates how skittish the market is....Also interesting to note that EU GAS STORAGE facilities are 90% full....but WINTER is coming.
2. Star Group (SGR) fell to a fresh all time low of $0.95 as the AFR reported that banks are not interested in refinancing any of its $1.3bn debt pile; they are now forced to engage alternative sources of funding from the likes of Soul Patts and Oaktree. This will mean significantly higher interest rates. I maintain my AVOID - still too much risk for my liking, plus we don't know the size of the pending AUSTRAC fine.
3. The beaten up Charter Hall Long Wale REIT (CLW) is looking cheap on paper with the stock falling down to $3.65 Vs a stated NTA of $5.63...however....I have my concerns over the valuation of their property portfolio, so I'm maintaining an AVOID for the time being.
4. Bank of England (BOE) warned that FOOD inflation is not going to fall anytime soon....my preferred exposures to agriculture/food are: AAC, GNC, BGA, CGC, IPL, NUF + FOOD ETF.
5. Wholesale extra virgin OLIVE OIL prices surged to an all time high of $8500 per ton.
ASX Market Update
ASX 200 up 26 points to 7338
CBA reported it's full profit of $10.16bn which came in around expectations. The market did push the stock 2.58% higher, probably thanks to a $1bn share buyback. (In my view they should be buying GOLD to stick on the balance sheet and not buying back expensive shares!). Below is a bit of commentary from the CEO who nicely got an inflation busting 50% pay rise; tough economic times have definitely arrived for the average Aussie and small business owners...
"The Australian economy has been resilient with the tailwinds of a recovery in population growth, relatively high commodity prices and low unemployment," CEO Matt Comyn said.
"However there are signs of downside risks building as rising interest rates have a lagged impact on mortgage customers and other cost of living pressures become a financial strain for more Australians."
"We are closely monitoring the impact of reduced discretionary spend, particularly on our small- and medium-sized business customers," he said.
COLUMN: My very personal oil shock — olive oil, that is.— Javier Blas (@JavierBlas) August 9, 2023
How bad is it? Last week, the benchmark wholesale price of extra virgin olive oil surged to an all-time high of $8,500 per metric ton, more than double a year ago.#aceitedeoliva | @Opinion
Link: https://t.co/qYWvmB6qkh pic.twitter.com/LD6HoLts45
"So ladies, for that magnificent king size water bed you have both been dreaming about....what price is olive oil going to hit?"
The Day Ahead
- Our SPI is up 7 points
- Bitcoin down 1% to $29,535
Movements affecting our resource stocks today (USD)
- BHP in the US up 0.4%
- Newmont up 0.11%
- Gold down 0.5% to $1950
- Paper Silver down 0.18% to $22.76
- Platinum down 1% to $894
- Copper up 0.65% to $3.79
- Brent Crude up 1.46% to $87.43
- Iron ore up 1.4% to $105.50
Asian Market Update
Japan down 0.53%, China off 0.49%, Hong Kong up 0.32%
While the financial press has been full to the brim with negative news on the Chinese economy - this was overlooked....
#China had exported 2.778 million vehicles, up 74.1% YoY, worth 383.73 billion yuan (about $53.41 billion), up 118.5% YoY, in the first seven months of 2023, making the country the world's largest auto exporter, data from the General Administration of Customs showed. pic.twitter.com/7z199To6s1
— People's Daily, China (@PDChina) August 9, 2023
Global Market Update
DOW down 191 points to 35,123
Former market darling WeWork, crashed 38% after management saying the office sharing business is likely to go bust....
WeWork was one of the greatest Wall Street PUMP 'N DUMP schemes of all time!
Germans up 0.49%, Brits added 0.8% and Frenchies put on 0.72%
European markets laughed off the 20% surge in NATURAL GAS prices overnight as traders piled back into stocks....I must admit I was a bit surprised by the surge higher considering EU's GAS STORAGE facilities are almost full....but... the onset of an early COLD winter could put all sorts of strains on the system.
Key Market Summary