The ASX is down sharply today, following the trend set by Wall St overnight.
It was Fed Chair Jerome Powell’s comments that instigated the plunge. He said: “It’s very premature in my view to be thinking about or talking about pausing our rate hike. We have a ways to go.
“What I am trying to do is make sure our message is clear, which is that we think we have a ways to go, we have some ground to cover with interest rates before we get to that level of interest rates that we think is sufficiently restrictive,” Powell said.
The S&P/ASX200 nosedived 128.80 points or 1.84% to 6,857.90 after setting a new 20-day high. Over the last five days, the index is virtually unchanged but is down 7.88% for the last year to date.
Bottom-performing stocks in this index are Penfal Group Ltd and Domino's Pizza Enterprises Ltd down 10.87% and 11.25% respectively.
Looking at the sectors, only Communication Services was in the green, up 0.14%. Materials and Consumer Discretionary were the hardest hit down 2.96% and 2.55% respectively. Utilities wasn’t far off the mark either, losing 2.25%.
In the news today
Domino’s downgrade
Domino’s was hit hard by a Citi downgrade to Neutral. Citi slashed its price target by 21% to $66.60.
Citi’s Sam Teeger highlighted a 33x FY23 PE multiple and guidance that assumes a significant 2H NPAT skew of 56% versus a five-year average of 50%.
Earnings upside from the FIFA World Cup and Asian Christmas performance is under question.
Teeger cut his FY23 NPAT forecast by 5% based on the FY23 NPAT guidance. However, he does expect consensus downgrades to be in the low double-digits and says Domino’s is one of the best long-duration growth companies, with a scale that should see it outperform smaller competitors in a challenging environment.
And in the worst news of the day, cherries and potato chips will be scarce this summer, as supply issues start to bite.
BHP (ASX:BHP) down on industrial action
BHP took a hit (as did my investment in them) after industrial action was launched against four of its Central Queensland coal mines. According to the Mining and Energy Union (MEU), bans were put on overtime and step-up duties put in place until further notice.
BHP finished down 3.21%
Action is being undertaken at Blackwater, Saraji, Peak Downs and Goonyella Riverside mines, with a stop-work motion in play on Friday at the latter two mines.
MEU Queensland District president Stephen Smyth said protected action would be measured and responsive to "BHP’s willingness to address members’ job security concerns".
“With coal prices so high there is constant pressure to maintain and increase production, so we are confident our bans and stoppages will be felt," he said.
“We are continuing our dialogue with BHP to work through members’ concerns about protecting current and future permanent jobs."
Trade surplus higher
The ANZ Bank has cited strong resource exports for the jump in Australia’s trade surplus. The surplus jumped to $12.4 billion in September and is up $3.8 billion from August 2022.
“LNG and metal ore exports led the way, rising 19.5% m/m and 8.7% m/m, respectively. Travel continues to rebound with tourism exports growing 12.0% m/m and imports up 3.4% m/m,” said ANZ’s economics team.
“The economic challenges facing China over the coming year look daunting, raising downside risks for Australia’s exports to China.
"We think Chinese steel demand will fall 3.5% this year due to significant structural problems within the Chinese property sector. This will hit Australia’s iron ore exports. More broadly, recent flooding in Australia will hurt agriculture and coal exports in the months ahead.”
Five at five
Oar Resources snaps up highly prospective lithium project near Wiluna in WA
“We see this project as a valuable addition to our stable of critical mineral assets that are in demand globally as the race for renewables continues to accelerate,” said Oar Resources Ltd (ASX:OAR) executive chairman Chris Gale.
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Riversgold intersects lithium-rich pegmatites in maiden drilling at Tambourah
“We are only really scratching the surface of this system, as we have only drilled about 20% of holes in this current program and still have another 16 kilometres of prospective granite/greenstone contact to properly explore," Riversgold Ltd (ASX:RGL) executive chairman David Lenigas said.
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Meeka Metals hits high-grade gold in RC drilling as St Anne’s grows at depth
“The intersection of high-grade gold in fresh rock below the oxide horizon points to the tenor of this system,” said Meeka Metals Ltd (ASX:MEK) MD Tim Davidson.
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West Wits Mining and partner Rio Tinto (ASX:RIO) kick off maiden drilling program at Mt Cecelia JV in WA
“Commencement of drilling at our Mt Cecelia project by farm-in partner Rio Tinto Exploration transitions this highly prospective exploration tenement into an exciting stage of exploration," West Wits Mining Ltd (ASX:WWI) MD and CEO Jac van Heerden said.
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Magnetite Mines (ASX:MGT) delivers 1.55 billion tonnes at 18.7% iron resource at Muster Dam; global resource up to 5.74 billion tonnes.
Magnetite Mines (ASX:MGT) Ltd has delivered 1.55 billion tonnes at 18.7% iron and 15.2% mass recovery in its initial mineral resource estimate (MRE) for the Muster Dam Iron Ore Project in South Australia.
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On your six
Breaking the norm: how we can boost our economy by doing away with outdated gender attitudes
“Our way of thinking has normalised differences between men and women to the point that we don’t just accept gender gaps, but we expect them," – Deloitte Access Economics partner Sruthi Srikanthan.
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The one to watch
AdAlta makes significant progress in expanding value of AD-214
AdAlta Ltd (ASX:1AD) CEO and managing director Tim Oldham speaks with Proactive about the significant progress being made with expanding the potential disease areas (indications) and routes of delivery for AD-214.
Watch