The ASX is down today.
The S&P/ASX200 dropped just 7.00 points today to 7,381.20 after setting a new 100-day high. Over the last five days, the index has gained 3.51%, but is virtually unchanged over the last 52 weeks.
The bottom performing stocks in this index are Imugene Ltd (ASX:IMU, OTC:IUGNF) and Capricorn Metals Ltd (ASX:CMM) down 5.88% and 5.83% respectively.
Looking at the sectors, Consumer Staples was the best performed up 1.86%, followed by Health Care up 1.13% and Real Estate 1.06% higher. The worst performed was Utilities down 1.28%, followed by Materials down 1.19% and Information Technology which lost 0.99%.
In the news
3 things to watch for the week ahead
Josh Gilbert, Market Analyst at eToro, shares his three things to watch in Australia in the coming days.
1. AU Unemployment Rate
In November, the unemployment rate stayed near record lows at 3.4%, and it looks set to remain at these levels for the December reading next week (January 19). Recession fears globally are leaving consumers pessimistic about the economy in 2023, and although the RBA looks capable of delivering a soft landing, economic growth is still expected to decline.
“As a result, this would likely see the unemployment rate rise in 2023 as households begin to slow down spending and businesses face uncertainty throughout the year. As of right now, though, there remains a lot of jobs for Australian consumers. The November readings of unemployment and job vacancies showed that there was almost a job for every person currently unemployed in Australia, with 492,800 unemployed, 444,200 job vacancies and 13.77 million employed, a new record.
2. Operational updates from the materials and energy sector
The materials sector has raced out of the blocks so far in 2023, gaining more than 8% this year. With China re-opening helping to support the outlook for commodities, local mining stocks were boosted, with BHP (ASX:BHP) trading at record highs.
Although the materials sector has started 2023 in the green, it’s been the opposite for Santos and Whitehaven Coal (ASX:WHC) in the energy sector, with both stocks in the red. Whitehaven shares have struggled with coal prices falling to start the year on top of an abnormally warmer winter in Europe, raising question marks over demand.
Some of the biggest names across the materials and energy sector will provide investors with operational updates throughout next week. BHP, Santos and Northern Star Resources (ASX:NST) on January 19, with Pilbara Minerals and Whitehaven Coal on the 20th. Operational updates give investors a look under the hood of production, setting the scene for their February results.
3. Netflix (NASDAQ:NFLX) Q4 Earnings: Back on track
Next week (January 20), Netflix, a stock well-owned by Australian Investors, reports its Q4 earnings. The streaming giant enjoyed a strong end to 2022, gaining as much as 60% in the last six months of the year after a dismal start.
Its valuation fell significantly, trading at 15x P/E, down from the 40x it started the year at, which contrarian investors took as an opportunity to buy and were subsequently rewarded. Looking ahead to its earnings, it looks like things might finally be falling into shape for Netflix, with a solid content slate that could help to push new subscribers back above 4.5 million in the quarter, the most additions for two years.
Investors' attention though, will likely be drawn to the uptake and adoption of its new ad-supported subscription model and its outlook for 2023. Investors will also take comfort in its rising free cash flow, which looks set to end the year positive for only the second time in a decade other than its record 2020. This points to a stronger year for revenue in 2023, as well as a substantial increase in subscribers, with estimates for 14 million new users. Wall Street consensus is for Q4 earnings at US$0.41 and revenue at US$7.8 billion.
Big increase in electric vehicle purchases to come
Car owners in Australia generally upgrade their cars every 10.6 years on average. In the year to December 2022, Australians bought 993,509 new vehicles, with sales in November up 17.9% on November the previous year.
In contrast, electric vehicle purchases grew from 2.05% in 2021 to 3.39% in 2022. Now, new research reveals the annual purchase rate for electric vehicles may be set to rise to the hundreds of thousands, with 42% of Aussies revealing it will be their next car purchase.
The findings were derived from a survey of an independent panel of 1010 Australians, commissioned by Money.com.au. The survey respondent pool included the general population and 11% indicated they do not drive.
Respondents were asked if, or when, they will buy an electric vehicle. Just 1% already own an electric vehicle. A third (34%) revealed they will buy one when they are ready to upgrade their existing car, while 8% would purchase one before they are ready for an upgrade. Nearly half (46%) revealed their next car will not be an electric vehicle.
The survey found that the appetite for electric vehicles is stronger among younger Australians: half (50%) of under-30s indicated they will purchase an electric vehicle either before or when they are ready to upgrade their car, compared with 45% of 31-50-year-olds and 34% of over-50s.
The take-up of electric vehicles even among the business sector is likely to increase after the Australian Government recently passed The Electric Car Discount Bill. Under the new law, the bill removes import tariffs and exempts employers from incurring fringe benefits tax on zero- or low-emissions vehicles that are beneath the Luxury Car Tax threshold (up to $84,916) – including battery electric, hydrogen fuel cell and plug-in electric vehicles – that were first held and used from 1 July 2022.
Money.com.au sought to uncover reasons why a segment of the population will not upgrade to an electric car. Respondents were asked to identify the top deterrent from a list of five. For 41%, the high electric vehicle prices are the main barrier, while 17% believe an electric vehicle isn’t suitable for their needs. Fifteen (15) % won’t upgrade mostly because they are worried high energy prices will lead to an increase in charging costs. Just 7% fear the charge on their vehicle won’t last the duration of a trip, potentially leaving them stranded.
One fifth (21%) won’t upgrade to an electric vehicle because of a relatively low number of charging stations. Australia has half the amount of electric vehicle charging stations (just over 3000) than petrol stations (6500). However, State Governments are planning to roll out more charging stations to close the gap. In NSW alone, the Government plans to roll out more than 500 fast-charging stations to recharge vehicles in 15 minutes, while the ACT Government anticipates it will need 600-1000 chargers installed by 2030 to support its renewable energy transition.
Licenced financial adviser and Money.com.au spokesperson Helen Baker says that electric vehicles are expensive like any new technologies at the start. “However, as more brands begin to produce electric models and the market becomes more competitive, prices will come down. Drivers could also take into account running costs when assessing overall price. Similar to other products, such as solar panels, while the upfront cost is high, the running cost can be significantly lower.”
As an example, the average monthly cost to run a sedan that travels 20,000 km per year is approximately $393, while an electric vehicle equivalent can cost just $161 to run.
Helen says that if Australia undergoes an economic downturn in 2023, new car purchases may slow down significantly. “With an economic downturn comes tightened spending and a pause on large discretionary purchases as consumers prioritise essential expenses and loan repayments.
“Despite this, the desire by the public to switch to electric vehicles is growing. If State Governments stay on track to remove the purchasing barriers by delivering more charging infrastructure, and if more electric vehicle models enter the market, we will see a stronger take-up over the next few years, particularly on the other side of an anticipated economic downturn.”
The full survey results, including age and State breakdowns, can be found here: money.com.au/research/aussies-purchase-evs
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