ASX climbs higher for the third day in a row: Aus shares close up 0.97%

The Australian stock market closed significantly higher on Thursday, extending the gains of the previous two sessions, following broadly positive cues from global markets overnight, as traders reacted to the US Fed’s widely anticipated interest rate hike and comments from Fed Chair Jerome Powell that hinted at a slowdown in the pace of rate hikes in future.

The BNPL sector today continued its extraordinary bounce, surging higher for the third day in a row, albeit from very depressed levels.

Standouts in the sector were ZIP (ASX:ZIP), which closed up 22.58 per cent, Sezzle (ASX:SZL), which closed up 44.68 per cent, Openpay (ASX:OPY), which closed up 49.25 per cent, and Laybuy (ASX:LBY), which closed up 94.81 per cent.

Among the major miners, BHP Group (ASX:BHP) closed up 2.13 percent and Fortescue Metals (ASX:FMG) closed up 2.86 percent, OZ Minerals (ASX:OZL) closed up 7.08 per cent and Rio Tinto (ASX:RIO) closed 0.74 per cent higher.

Financials made slight gains. National Australia Bank (ASX:NAB) closed 0.66 per cent higher, ANZ Banking (ASX:ANZ) closed 0.13 per cent higher, Commonwealth Bank (ASX:CBA) closed 1 per cent higher and Westpac (ASX:WBC) closed 0.09 per cent higher.

At the closing bell, the S&P/ASX 200 was 0.97 per cent or 66.50 points higher at 6889.70.

Asian equities are mostly higher Thursday. Japan is higher approaching its close, but well off its highs. Greater China is mixed, with mainland stocks higher but the Hang Seng lower after a bright start. There are gains in South Korea, but losses in Taiwan ahead of GDP data tomorrow. Southeast Asia is higher, with India opening very strongly after cues from Wall Street.

All eyes are now on the release of second-quarter growth data later Thursday. After a 1.6 per cent contraction in the previous three months, another negative reading would put the economy into a technical recession.

An expected phone call between Joe Biden and China’s President Xi Jinping will also be high on the agenda for investors as the world’s superpowers try to navigate a period of rising tensions. Anything on US tariffs and Taiwan will be among the main areas of focus.

The Dow Jones futures are pointing to a fall of 27 points.
The S&P 500 futures are pointing to a fall of 6 points.
The Nasdaq futures are pointing to a fall of 47.25 points.
The SPI futures are pointing to a rise of 65 points when the market next opens.

Best and worst performers

The best-performing sector was Materials, up 2.43 per cent. The worst-performing sector was Utilities, down 1.81 per cent.

The best-performing stock in the S&P/ASX 200 was Zip Co (ASX:ZIP), closing 22.58 per cent higher at $1.52. It was followed by shares in PointsBet Holdings (ASX:PBH) and Novonix (ASX:NVX).

The worst-performing stock in the S&P/ASX 200 was Atlas Arteria (ASX:ALX), closing 6.14 per cent lower at $7.64. It was followed by shares in Computershare (ASX:CPU) and NIB Holdings (ASX:NHF).

Local economic news

The value of retail sales in Australia was up a seasonally adjusted 0.2 per cent month on month in June, the Australian Bureau of Statistics said on Thursday. This comes in at $34.239 billion, which misses expectations for an increase of 0.5 per cent and was down sharply from 0.9 per cent in May. Individually, retail sales for clothing, cafes and other were up, while food, household goods and department stores were down. On a yearly basis, retail sales were up 12.0 per cent.

Company news

Pilbara Minerals (ASX:PLS) increased production of spodumene concentrate by 56 per cent in the June quarter from the immediately preceding period in an effort to take advantage of surging lithium prices. In the June quarter the company “continued to progress work programs and activities to increase spodumene concentrate production at the Pilgangoora Project, in response to surging global demand for lithium raw materials,” Pilbara said in an update on Thursday afternoon. “Production for the quarter was 127,236 dmt of spodumene concentrate, representing a 56 per cent increase over the March 2022 quarter and bringing full-year production for the 2022 financial year to 377,902 dmt, which is at the upper end of annual production guidance.” Shares in PLS closed 6.23 per cent higher at $2.73.

Euro Manganese (ASX:EMN) announced today its Positive Feasibility Study Base Case Results for the Chvaletice Manganese Project, with an after-tax NPV of US$1.34 billion and IRR of 21.9 per cent, and a 4 per cent pay back period on initial capex expenditure of US$757m. Dr Matthew James, Euro Manganese’s President and CEO, commented: “I am extremely pleased with the results of the Feasibility Study, which further validate the financial credibility of the Chvaletice Manganese Project, even in the current inflationary environment and using conservative risk-adjusted pricing. The strength of the Project economics, its green credentials and the forecast demand from the EV industry for our highly specialized products support a wide range of financing alternatives.” Shares in Euro Manganese are trading 5 per cent higher at 31.5 cents.

ELMO Software (ASX:ELO) today announced its preliminary FY22 results, reporting strong growth in annualised recurring revenue, revenue, cash receipts and improved operating cash flow. Group ARR grew to $108.2 million, representing 29 per cent organic growth from 30 June 2021. Revenue increased to $91.4 million, up 32 per cent pcp. Cash receipts grew to $116.9 million, up 46 per cent pcp. The Group recorded underlying EBITDA of $7.1 million, up $6.5 million pcp and above the top end of the upgraded guidance range. The cash balance was $47.9 million. Total operating cash outflow reduced to negative $17.4 million, a 34 per cent improvement pcp. Commenting on the result, CEO Danny Lessem said that FY22 was a strong year for the ELMO Group underpinned by high growth and increasing operating leverage. ELO shares closed up 13.17 per cent at $2.75.

Fortescue Metals Group (ASX:FMG) has beaten its iron ore export guidance to ship 189 million tonnes to the end of June 30, after steaming home with a record 49.5 million tonne June quarter. The Pilbara iron ore major has lifted output expectations for the current financial year, saying it expects to ship up to 192 million tonnes of ore, including about a million tonnes from its delayed Iron Bridge magnetite project. But the company lifted cost expectations too on the back of ongoing cost inflation in the Australian mining industry, announcing expected average cash costs of $US18 to $US18.75 a tonne for its direct shipping ore in the current financial year. That is up from an average $US15.19 a tonne last financial year, and above the $US17.19 a tonne cost of the June quarter. Shares in FMG closed up 2.86 per cent at $18.7.

Vulcan Energy Resources (ASX:VUL) continues to deliver on its plan to develop the Zero Carbon Lithium Project during the June 2022 Quarter, announcing a strategic investment from a top-tier automaker and signing its first heat offtake agreement, as market fundamentals and macro-policy settings underpinning this project continued to strengthen. Vulcan’s Managing Director Dr Francis Wedin commented, ”A highlight of the June quarter was the equity investment from Stellantis. Their significant, premium investment in Vulcan and the Zero Carbon Lithium Project represents a strong statement by one of the world’s largest automakers regarding sustainable and strategic sourcing of battery materials.” Shares in VUL closed up 4.6 per cent at $7.51.

Kogan (ASX:KGN) today announced another year of record gross sales and the return to positive quarterly adjusted EBITDA in 4QFY22 following successful ongoing recalibration of operating costs. Gross profits slipped from $203.7 million in the 2021 financial year to $184.6 million in the year to the end of June. Earnings before interest, tax, depreciation and amortisation, on an adjusted basis, fell more than 40 per cent to $19.1 million in the year. Despite this, the company pointed to the 0.1 per cent growth in gross sales, which pushed the measure to a new record, and profit growth in the final quarter of the financial year as signs of strength. Founder and CEO of Kogan Ruslan Kogan, said: “Times are changing. In uncertain times, people don’t want to alter their lifestyle but they are happy to shift the way they shop. We know that in an environment where great value becomes even more important, Kogan.com serves an important need.” Shares in KGN closed up 50.16 per cent at $4.70.

Commodities and the dollar

Gold is trading at US$1740.57 an ounce.
Iron ore is 0.6 per cent lower at US$111.05 a tonne.
Iron ore futures are pointing to a rise of 6.61 per cent.
Light crude is trading $1.09 higher at US$98.35 a barrel.
One Australian dollar is buying 70.07 US cents.