Miners gain, but ASX again flat at noon

Derek Rose | July 26, 2022

The local share market is once again quiet, with gains for the mining and energy sectors almost perfectly balanced by losses across consumer and tech names as well as healthcare giant CSL. 

The benchmark S&P/ASX200 index was down 0.3 points to 6,789.6, while the All Ordinaries was down 1.5 points to 7004.9.

Betashares chief economist David Bassanese told Ausbiz TV it was no surprise the market was staying cautious, as “we’ve got a lot of event risks this week”.

Australian second-quarter inflation data will be released on Wednesday morning and the US Federal Reserve is set to announce rate hikes early on Thursday AEST. 

Mr Bassanese said anecdotal indications suggest the Australian consumer price index data could be even higher than consensus expectations of a 6.3 per cent increase.

“If anything, the CPI may well surprise on the high side, in which case the chatter will pick up about a potentially bigger move by the RBA,” Mr Bassanese said. 

Economists are generally predicting the Reserve Bank of Australia will hike the cash rate by 50 basis points on August 2, but Mr Bassanese said he could foresee a 75 basis point hike if inflation comes in hotter than expected. 

He also said there is a “small chance” the Fed will surprise markets with a 100 basis point rate hike, rather than the 75 basis points generally expected.

Higher interest rates are generally understood to have a negative impact on equities, because if investors can receive decent returns in bonds and savings accounts that makes the riskier share market less attractive. 

The energy sector was up 1.9 per cent at midday, as Russia’s state-owned monopoly Gazprom said it would cut natural gas deliveries to Germany through the Nord Stream 1 pipeline.

Woodside, Santos and Beach Energy were all up by between 1.8 and 3.2 per cent. 

The mining sector was up 1.7 as iron ore prices rose for a second day on a positive outlook for China’s economy.

BHP had advanced 2.1 per cent to $38.15 while Fortescue was up 2.7 per cent to $18.72 and Rio Tinto added 1.8 per cent to $98.91.

Regis Resources was down 2.8 per cent to $1.555 after announcing higher mining costs in the June quarter, in part because of operational issues at its Duketon gold project in WA.

The big banks were mixed, with CBA down 0.5 per cent to $96.60 and ANZ up 0.9 per cent to $22.82. NAB was down 0.2 per cent to $29.80 while Westpac had added 0.6 per cent to $21.17.

CSL was down 1.9 per cent to $285.49 as the Australian dollar gained ground against its US counterpart. 

Wesfarmers had dropped 2.3 per cent to $45.83.

Woolworths was down 1.3 per cent to $36.96 as the supermarket giant announced Origin Energy chairman Scott Perkins would replace Gordon Cairns as chairman when the latter retires in October.

Myer Holdings had soared 22.5 per cent to a nearly three-month high of 49c after the struggling retailer said its second-half sales were up roughly 17 per cent, compared to the same period in 2021. 

Myer said it expected to finish the fiscal year with a positive net cash position of more than $155 million, up from $112 million a year ago, as chief executive John King executes a turnaround plan.

Zip Co was up 14 per cent to a 10-week high of 97.5c. If the gains hold this afternoon it will be the buy-now, pay-later company’s fourth day of double-digit gains in five sessions, although Zip still has a long way to go to reach the lofty heights it hit last year.

The Australian dollar meanwhile was at a month-and-a-half high against the greenback. The Aussie was buying 69.68 US cents, from 69.18 cents at Monday’s close.