15 AUG 2022 – Monday Market Highlights – Transcript

Kate Power
Good morning. It’s Monday the 15th of August and I’m Kate from Milford. This week, the US released their July CPI print, which saw headline inflation at 8.5% year on year, which is a decline of point 6% from the previous reading, and was also below expectations of 8.7%. digging into the details, the key driver of the lower inflation print was declining energy prices, while food still increased. Core inflation remained flat with June at 5.9%, which was also below expectations, but did highlight that the stickier parts of inflation like wages still remained high. Following the CPI announcement, equity markets rallied reflecting the view that inflation has peaked. The CPI reading reduces the likelihood of an aggressive 75 basis point increase in the Fed rate at the next meeting in September. Consensus is now assuming a 50 basis point increase in the Fed rate. Also from the US the Producer Price Index print came in weaker than expected at 9.8% in July, down from 11.3% in June, which was also below consensus at 10.4%. The University of Michigan consumer sentiment preliminary estimates for the US increased to 55.1 in August, from 51.5 in July, the highest in three months and beating market forecasts are 52.5. The data showed inflation expectations for the year ahead decreased point 2% to 5%. The final data for August will be released in a few weeks. Turning to equity news Australian reporting season kicked off this week with several companies reporting their results. Starting with the banks, the key takeaways was a and Zed had a good result and a raising capital to buy Suncorp bank, NAB and CBA both showed cost pressures which weigh down their results, and they expect these pressures to continue into the future. Interest. Interestingly in the CBO result briefing, the Chief Executive Officer Matt komen provided some macro insights and Outlook commentary, such as CBA has seen a reduction in the spend across debit and credit cards, particularly in discretionary items. Also 40% of mortgages are still fixed, which will result in a lag to the impact of rising rates. And finally, he anticipates global growth to slow significantly and expects a recession in the US and the UK. Telstra also reported their full year results which showed their revenue and underlying EBIT da in line with expectations. And Pat was roughly 6% above consensus driven by lower interest expense. The key positives for the result came from the mobile segment outperformance an increase in their final dividend to 8.5 cents per share from eight cents previously, and solid free cash flow of $4 billion. In terms of guidance, the market focused on the 2% underlying EBIT Doug downgrade to FY 23 numbers. Generally speaking, equity markets have been resilient, but the overall results so far have been fairly benign and largely in line with expectations. Also an equity news bhp submitted a non binding indicative proposal to acquire 100% of us minerals. The proposal to acquire as minerals for a cash consideration of $25 per share, which reflected a 32% premium to the previous closed price was rejected by us minerals board, as they believe that offer undervalues its copper and nickel assets. Looking to the week ahead, Australian reporting season continues, with many companies reporting full year 2022 results, including large names like Westpac Banking Group, BHP CSL and AGL energy. In economic news, you can look out for the Australian unemployment rate print, where consensus forecasts the unemployment rate to be 3.5% in line with the previous reading. The RBNZ fed press conference on Wednesday will provide details on their recent 50 basis point interest rate decision. In global news, the euro area GDP growth rate print will be released where it’s forecast to grow at 4%.

Also in Europe, we expect to see the inflation print which is forecast to be 4% up from 3.7% last month. The UK unemployment rate is forecast to remain flat at 3.8%. And the headline inflation print is expected to be up point 4% to 9.8%. In the US retail sales data is expected to fall by point 9% Retail Sales data is a good indication of the US consumption conditions and finally the FOMC minutes will be released later in the week thank you for listening and we’ll see you next week