BNPL sector on fire: Aus shares close 0.23% higher

The BNPL sector was on fire again today. Shares in Zip (ASX:ZIP) skyrocketed 21 per cent. Sezzle (ASX:SZL) shares rose 95 per cent before going into a trading pause after receiving a speeding ticket from the ASX. Laybuy (ASX:LBY) and Openpay (ASX:OPY) closed up 79 per cent and 31 per cent respectively.

At the closing bell, the S&P/ASX 200 was 0.23 per cent or 15.90 points higher at 6823.20.

Asian equities higher: Nikkei +0.26%, Hang Seng +1.19%, Shanghai Composite +0.03%

Japan is ending its day with modest gains following a weak open. Greater China is mixed, with the Hang Seng pulled lower by property developers and IT in a reverse of yesterday’s action. Taiwan is slightly higher, South Korea is lower, Southeast Asia is mixed, while India opened higher.

Markets are awaiting the Fed, which is widely expected to raise rates by 75 basis points. A bigger focus is on whether the Fed guides down rate expectations for September and beyond. The US Q2 GDP forecast is expected to show a second straight quarterly contraction and to generate more recession discussion.

US earnings season is rolling on with more big tech companies to report.

Biden will speak with China’s President Xi Jinping on Thursday, but is not expected to make much headway on major issues such as Taiwan and tariffs.

The Dow Jones futures are pointing to a rise of 156 points.
The S&P 500 futures are pointing to a rise of 36 points.
The Nasdaq futures are pointing to a rise of 179.25 points.
The SPI futures are pointing to a rise of 18 points when the market next opens.

Australian headline inflation falls short of estimates, tempering likelihood of 75 bp RBA rate hike

Australian Q2 headline inflation came in at 1.8 per cent q/q, below consensus of 1.9 per cent and Q1’s 2.1 per cent. Inflation also missed on a y/y basis, coming in at 6.1 per cent vs consensus of 6.3 per cent. Trimmed mean inflation of 1.5 per cent q/q was in line with expectations, but on a y/y basis came in at a record high of 4.9 per cent and surpassed consensus of a 4.7 per cent read. While fuel largely drove the headline increase, inflation was broad based, with pricing pressures evident in clothing, housing and household equipment. Large price rises were also seen in several food categories. Elevated freight costs, supply constraints, rising construction costs and strong demand are driving up inflation along with a rebound in rents. While the CPI data is likely to firm expectations of a 50 bp RBA rate hike in August, it has also diminished already slim prospects of a 75 basis point increase next month.

South Korean consumer confidence fell by its greatest amount since the beginning of the pandemic amid pressures from inflation and rising interest rates.

Chinese industrial profits rebounded in June as major cities emerged from lockdown. China continues to battle multiple Covid outbreaks, with focus shifting to Wuhan after a district was put in lockdown following the discovery of four infections. This marks the first time Wuhan has imposed a lockdown since the initial outbreak in early 2020. There is better news elsewhere with mainland China recording a drop in daily Covid infections and Shenzhen officials saying the city’s outbreak is under control. Shanghai also recorded just one case outside of quarantine.

Best and worst performers

The best-performing sector was Health Care, up 1.19 per cent. The worst-performing sector was Materials, down 1.21 per cent.

The best-performing stock in the S&P/ASX 200 was Zip Co (ASX:ZIP), closing 20.98 per cent higher at $1.24. It was followed by shares in Brainchip (ASX:BRN) and Clinuvel Pharmaceuticals (ASX:CUV).

The worst-performing stock in the S&P/ASX 200 was City Chic Collective (ASX:CCX), closing 5.06 per cent lower at $2.25. It was followed by shares in Champion Iron (ASX:CIA) and Iluka Resources (ASX:ILU).

Local economic news

Bonds are mixed, with Treasury rates higher at the long end, while the Aussie yield curve is bear flattening ahead of Australian CPI.

Australian headline inflation is forecast to have risen to a 32-year high of 6.3 per cent y/y (1.9 per cent q/q) in Q2, from 5.1 per cent in Q1. Trimmed mean inflation is estimated to have jumped to 4.7 per cent y/y from 3.7 per cent in Q1, well outside the RBA’s 2-3 per cent target band.

The market is pricing in a 50 basis point RBA rate hike in August, but some think a hotter-than-expected inflation print could swing expectations to a 75 basis point hike, particularly if Fed policy outcome is more hawkish than anticipated.

Company news

Junior miner Cobre (ASX:CBE) today announced the first intersection of significant copper mineralisation from the ongoing drill program on the company’s KML’s NCP licences. Based on visual estimates, confirmed with pXRF readings, drill hole NCP07 has intersected a broad zone of copper mineralisation, starting from 214m and continuing for approximately 59m downhole to 273m. Mineralisation includes vein and fracture fill chrysocolla as well as fine-grained copper sulphides, which increase in abundance between 250 and 260m downhole. Commenting on the initial drilling results, Cobre Executive Chairman and Managing Director, Martin Holland, said: “This new copper discovery represents a transformational moment for Cobre Shareholders. Cobre has never been in a better position from a project ownership, technical and operation perspective and now we have a promising copper intersection, on one of the most prospective Copper belts in the world.” Shares in CBE closed up 75.51 per cent at 8.6 cents.

Silver Lake Resources (ASX:SLR) has set fresh sales guidance of 260,000 ounces of gold production for the 2023 financial year after withdrawing its previous quarterly guidance in April amid higher costs and issues to do with labour uncertainty. The mining company said it generated quarterly production of 65,844 ounces of gold and 235 tonnes of copper in the three months through June. For the financial year, output of the precious metal reached 251,887 and 991 tonnes of copper. “Silver Lake’s operations have resiliently managed the challenges presented by the prevailing operating climate during the quarter and throughout FY22, which were impacted by the ongoing and evolving response to COVID-19, and labour and supply chain constraints,” it added. Shares in SLR closed up 6.02 per cent at $1.41.

BetMakers Technology Group (ASX:BET) today announced a strong quarterly cash flow statement and quarterly activities report for Q4 FY22. The $26.2m in reported cash receipts from customers in Q4 FY22 highlights the continued strong performance of the existing business with FY22 cash receipts from customers of $93.4m. Net cash from operating activities for the quarter was $0.4m, which includes approximately $2.5m in payments not directly related to the normal on-going costs for the period. Shares in BET closed up 3.09 per cent at 50 cents.

Nickel-focused Mincor Resources (ASX:MCR) announced today OZ Minerals senior executive and former Rio Tinto veteran Gabrielle Iwanow as its new chief executive and managing director. Ms Iwanow will step into the role in November after David Southam steps down on August 12. Mr Southam is stepping down after Mincor’s successful return to the ranks of Australian nickel producers with the ongoing ramp-up of its Kambalda Nickel operations in WA. Prior to joining OZ Minerals as the manager of the Prominent Hills mining operations in September 2018, Ms Iwanow had a varied and highly successful 14-year career at Rio Tinto, including as manager of the Paraburdoo Iron Ore Operations.
Shares in MCR closed down 1.04 per cent at $1.90.

ASX-listed battery manufacturing group Magnis Technologies (ASX:MNS) has lodged a federal court application demanding penny stock message board HotCopper disclose the identity of 15 anonymous posters it believes disparaged the company. The July 22 application against HotCopper operator Report Card Pty Ltd seeks an order to force HotCopper to disclose the full name and address of each poster in addition to email addresses, any internet protocol (IP) address, the internet service provider, and any social media accounts linked to the HotCopper accounts. Magnis refused to comment on the court application, although it is believed the company is furious over what it sees as a series of malicious and false statements anonymously posted to HotCopper message boards about Magnis’ management and operating performance. Shares in MNS closed down 3.13 per cent at 31 cents.

Commodities and the dollar

Natural gas prices are surging around the world as scorching temperatures stoke demand for the fuel, and as Europe’s push to move away from Russian fuel shakes global energy markets.

US natural gas futures surged more than 11 per cent at one point on Tuesday to its highest level since July 2008. Natural gas is now on track for its best month on record.

Gold is trading at US$1719.81 an ounce.
Iron ore is 7.4 per cent higher at US$111.70 a tonne.
Iron ore futures are pointing to a rise of 2.40 per cent.
Light crude is trading $0.74 higher at US$95.72 a barrel.
One Australian dollar is buying 69.35 US cents.