27 JUN 2022 – Monday Market Highlights – Transcript

Nick Morgan
Good morning. It’s Monday the 27th of June. And I’m Nick from Milford. Looking at the key economic news from last week. In the US, the June manufacturing PMI fall of 52.4, down from 57 in May and well below market expectations of 56, pointing to the slowest growth in factory activity for almost two years. Looking into the manufacturing sub components, the output index was down to 49.6, and new orders were down to 48.2. A low since May 2020. Remember that it’s contractionary if it’s below 50. There were however, some positive signs for inflation, as input prices fell to 77.9 or low since April 2021. And output prices fell to 69.4. The US services PMI also fell to 51.6 in June, down from 53.4 in May and well below consensus 53.5. That downward pressure primarily came from a sharp fall in new orders continuing in the US the University of Michigan Consumer Sentiment Survey at a record low in June as the final survey was revised down to 50. From 50.2 and the preliminary reading the EU PMIs followed a similar trend to the US with services and manufacturing print below market expectations and down from July and both France and Germany. The downward trend is certainly pointing to a slowdown in growth which may flow into company earnings, a key risk to watch. We also had UK CPI for May out last week, which was in line with market expectations of 9.1% from 9% in the previous month and the highest print since 1982. The primary drivers were housing and utilities, transport, food and non alcoholic beverages, furniture and household goods and alcoholic beverages and tobacco. Moving closer to home. We have the RBA minutes and Governor Lowe speech which reiterated that the market should be prepared for more rate hikes, and that the current level of interest rates remains very low in the context of inflation and the tight labor market. Low stated that the RBA is not on a preset path with respect to rate and reinforce that the pace of tightening will be guided by data and the outlook for inflation and the labor market. Low also pushed back against the notion of a 75 basis point rate increase in July, saying that the central bank will consider a 25 or 50 basis point hike. The minutes also noted that sequential 25 basis point increases represented a steady approach given its monthly meeting frequency, and that a year in cash rate of 2.1% would still represent rapid tightening. Turning to equity news quantitative trading update last week, where they’re maintained the EBITDA guidance for the second half of 2022 at 450 to 550 million, and they forecast and improve net debt of 4 billion by the end of June below the 4.5 billion reported last month. They stated no changes to international capacity. But they’re looking to cut domestic capacity by a further 5% on top of the earlier announced 10% In order to deal with rising costs including fuel. Another key piece of equity news was that after months of speculation Koopa energy have announced that they will buy APA groups or boss gas processing plants for between 270 to $330 million. Cooper energy will raise 244 million in an equity raising comprising of an $84 million dollar institutional placement and a $160 million 245 entitlement offer. Looking forward to the week ahead. locally. We have the Australian retail sales numbers out for me and the market is expecting 0.4% growth month on month down from 0.9% in April. In the US we have the personal income and spending data. The market is forecasting a 0.5% increase month on month for both income and expenditure and may finally in New Zealand we have the 100 Consumer Confidence Survey, which is a good barometer of consumer confidence across New Zealand households and how this affects their spending behavior. Thanks for listening. We’ll see you next week.