The ASX hit a two-month low today, dragged down by Materials, IT and Real Estate.
The S&P/ASX200 fell sharply, 106.20 points or 1.56% to 6,700.20. Over the last five days, the index has lost 1.88% and 7.89% over the last 52 weeks.
Bottom-performing stocks were Imugene Limited and Sayona Mining Ltd, down 13.04% and 7.55% respectively.
On the flipside Viva Energy Group Ltd was one of the only standouts, up 4.56% on news it will buy Coles Express service stations. More on that shortly.
Of the sectors, Materials lost 2.64%, Real Estate lost 2.17%, Information Technology lost 1.81% and Utilities fell 2.34%. There was no sector today in the green.
Australia’s performance was no surprise as all major indices in the US fell yesterday, with the S&P 500 index down 1.1% to 3,855 points, the Nasdaq down 0.9% to 11,425 and the Dow Jones Industrial Average index falling 1.0% lower to 30,706 points ahead of the Federal Reserve’s next move on combatting inflation.
We’ll know the full extent of the cash rate rise damage – 0.75% or 1% – on Thursday.
What’s making news today
Coles sells Express servos
As noted, Viva Energy will pay $300 million to lighten Coles Group Ltd of its service station burden.
Coles said its Express outlets delivered the lowest return on capital of its broader retail business. It will now turn its focus to higher margin liquor and supermarket businesses.
Viva acquired 710 Coles Express after the unit delivered earnings of $42 million in the 2022 financial year – just 2% of Coles overall group profits.
"This is the lowest return on capital business in the group," Coles chief executive Steven Cain told analysts.
"We did expect that to improve in the future as fuel volumes improve – but the returns we can get out of supermarkets and liquor in our opinion are far, far greater."
Viva and Coles were in partnership on the sites until 2029, however, due to modest fuel volumes (impacted by the pandemic), Coles made the decision to pull out of its interests.
The aim was for Coles to deliver 70-75 million litres per week; however, Coles said it had delivered just 60 million litres in the last three years.
In good times, Coles was raking in $200 million in profit with shopper dockets contributing 18 cents per litre. However, in 2013 the competition regulator stepped in to cap discounts at 4c a litre over concerns the savings were being subsidised by Coles and Woolworths' supermarket divisions.
Viva believes there will be a recovery.
“We see continued recovery in the markets that have been most affected, which is predominantly Sydney and Melbourne. And as mobility starts to improve, we believe that getting back to 60-65 million litres in the near-term is quite achievable,” Viva chief executive Scott Wyatt said.
“And beyond that, as things start to normalise, the potential is there to get back to 65 to 70 million litres in the medium term.”
The outlets will still be branded Coles Express until a proper transition into a different brand is made.
Aussies need savings
24% of Aussies save $250 or less each month according to a new survey by financial broker Savvy.
The survey, which investigated the savings and investment habits of Australians, shows that saving rates among significant portions of the population are low, with 19% reporting that they did not save any money regularly.
24% of just over 1,000 respondents said they saved at least $250 per month, with 15% saying they save between $251 and $500. More than 32% responded that they were saving over $750 a month.
In terms of investing, the survey found Australians place into savings accounts (78%), superannuation (24%) and shares (19%).
When given an opportunity to identify all preferred saving and investment vehicles, most respondents, around 782, use a savings account. This figure was slightly higher for females (80%) than males (76%).
The division between sexes was more pronounced when it came to stocks and shares, which were chosen by 23% of males, compared with only 14% of females. Similarly, more men than women were contributing to their superannuation; 26% vs 21% respectively.
However, Australians are not confident their investments will outpace inflation in future.
While 37% of total respondents expressed a “neutral” sentiment, 22% of the 1002 total respondents were “unconfident”, while a further 21% were less optimistic again, answering “not confident at all”. Female survey participants were the least confident, with 25% choosing “not confident at all”, compared to 18% of their male counterparts.
Bill Tsouvalas, Savvy’s resident money expert, says that even in times of rising cost of living, paying oneself first and putting money aside is as important as ever.
“Though everything seems to be getting more expensive, now isn’t the time to stop putting money away for the future.
"When inflation is high, you should be looking for easy investment options that will protect your savings, like term deposits, savings accounts, shares and managed or indexed funds; all of which can provide a better return on investment and help you save for big ticket items, such as a house deposit.”
For full survey report, click here.
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