The ASX was pulled higher by miners and energy stocks today. Buy now pay later stocks also rebounded and Myer surged, with the retailer announcing its best performance in years. Over the last five days, the index has gained 2.37%, but is down 8.56% for the last year to date.
The benchmark S&P/ASX200 gained 17.40 points or 0.26% to 6,807.30. The top-performing stocks in this index were Zip Co Ltd (ASX:Z1P) up 20.47% and Paladin Energy Ltd (ASX:PDN) up 8.54%.
ZIP was driven higher by its quarterly results with co-founder, global CEO and managing director Larry Diamond saying, "We are pleased to announce another solid set of results across our key operating metrics in Q4, demonstrating the continued strength of the Zip business.
"All this was done whilst balancing and implementing our updated financial strategy to fast-track profitability, by reducing our global cost base and refocusing our capital and efforts on core products and core markets.”
He also highlighted the company’s growth and resilience since it started its journey nine years ago.
“As we celebrate our ninth birthday, we reflect on the incredible growth, from start-up pioneering the role of BNPL, to a publicly listed, global business with over 12 million customers.
"Our role as a financial services technology provider is becoming even more crucial in the current climate as we support our customers and merchant partners through this inflationary period.
"The resilience of Zip and its business model has us well placed to thrive through this next stage of the journey and even though we are nine years in, it genuinely feels like we are only getting started!”
As for Paladin’s gains today, CEO Ian Purdy said, “The decision to restart production at the Langer Heinrich Mine is a significant milestone for the company, our shareholders and the community in Swakopmund, Namibia.
"The response to our restart decision from our customers, shareholders, local community members and the Namibian government has been exceptionally positive and reflects the significance of the Langer Heinrich Mine to a range of stakeholders.
"With the strength of the company’s existing uranium sales offtakes combined with our strong balance sheet we are well positioned to deliver production from Langer Heinrich and generate sustainable value creation.”
Both companies were indicative of the broader gains made by their respective sectors.
In the news today
Central banks under attack
A former central banker is now eating his own.
Former Reserve Bank of New Zealand governor Graeme Wheeler has accused central banks of failing to control inflation and causing a risky house price boom.
Wheeler believes the banks were distracted by climate change and their misplaced confidence and that stimulatory monetary policy during the COVID-19 pandemic contributed to the current global inflation surge.
“Some central bankers have said that there was no alternative and have no regrets at the outcome in terms of explosive house prices and rapidly rising consumer price inflation,” NZ’s central bank governor from 2012 to 2017 said.
“They are wrong on the first point and should have major regrets on the second.
Co-writing with New Zealand Initiative senior research fellow Bryce Wilkinson in How Central Bank Mistakes after 2019 Led To Inflation, the pair stated “Central banks globally have made serious monetary policy mistakes. To restore credibility, they must acknowledge and correct those mistakes."
False dawn for consumer confidence
While consumer confidence improved slightly in the June quarter, it isn’t likely to last as households become more concerned with inflation and rising interest rates.
The Australian Bureau of Statistics (ABS) released the consumer price index for the June quarter today, while the ANZ-Roy Morgan consumer confidence index also published today rose by 0.7% to 82.6 points in the seven days ended July 24.
That’s compared to a 0.2% rise in the previous week.
"Confidence, however, remained very weak and at levels last seen during the early stages of the COVID-19 pandemic," ANZ head of Australian economics David Plank said.
"Headlines about another surge in actual inflation when the Q2 CPI is published will likely place some downward pressure on sentiment this week."
It is expected we’ll see a rise of 6.2%, from 5.1% in annual inflation in the March quarter – the highest annual number since the December quarter of 1990.
It’s off the back of a quarterly rise of 1.8% for the three months ended June 30.
These figures point to a large rate rise in August, which could be as high as 50 basis points which would drive the cash rate to 1.85%, from 1.35%, according to financial market economists.
Any cash rate hike would be passed on by the banks in interest rate rises.
The ANZ-Roy Morgan survey measured inflation expectations over the week and found households are bracing for a 2% rise to 6% in line with financial market expectations for the June quarter inflation outcome.
Food and grocery prices, which account for around 16% of the overall inflation number, and fuel are the main drivers.
According to Australian Food and Grocery Council CEO Tanya Barden the impact of war in Ukraine on commodity and fuel prices, higher input costs on the manufacturing side, east coast flooding and supply chain constraints are all impacting retailers and their customers.
"That has all just really layered upon each other to lead to really significant levels of inflation," she told a CEDA inflation briefing.
"We haven't seen this level of food inflation globally for a decade ... so it is something that I'm sure many consumers are feeling the pinch on."
Inflation data released tomorrow is likely to show that while food inflation was running at about 5.3% in the March quarter, this is likely to be higher in June.
"Faced with all of these new inflationary pressures, businesses have had a more limited capacity to be able to offset and absorb the cost pressures coming through," Barden said hinting that we could see the 7% inflation mark in the June quarter.
Here’s a look at some of the top small cap stories of the day.
BlackEarth Minerals jumps on delivering 63% resource increase for Maniry Graphite Project in Madagascar
“The success at Maniry of discovering and continual upgrading the mineral resources at Maniry is testament to the exceptional potential that exists at the project," BlackEarth Minerals NL (ASX:BEM) MD Tom Revy said.
Cipherpoint gains momentum from funding and cost reduction initiatives
Cipherpoint Ltd (ASX:CPT)’s cost reduction program has saved more than $1 million in annualised costs, having been identified and removed without any material adverse impact on the business.
Aeris Resources fields high-grade copper-zinc hits at Jaguar in WA
Aeris Resources Ltd (ASX:AIS) has fielded high-grade copper-zinc hits from recent resource definition drilling at the Jaguar Operations in Western Australia.
Hawsons Iron delivers 21% increase to resources; namesake project now holds 484 million tonnes
“The combined measured and indicated resource of 247 million tonnes sets up the BFS for the ore reserve estimation to satisfy project lenders that there is sufficient high-grade material to confidently meet targeted minimum concentrate production of 20 million tonnes per annum," said Hawsons Iron Ltd (ASX:HIO) MD.
Nexus Minerals grows Crusader-Templar gold potential with more broad, high-grade results
Nexus Minerals Ltd (ASX:NXM) continues to grow the golden potential of Crusader-Templar Prospect within the Wallbrook Gold Project in the Eastern Goldfields of WA with further broad high-grade gold assay results.
On your six
Google has fallen in price this year, but its second-quarter earnings could reverse its fortunes.
Alphabet bets on Google Cloud in run-up to second-quarter earnings
Tech giant hopes to find favour in underwhelming earnings season.
The one for good luck
Atlantic Lithium fields broad high-grade lithium intercepts at Ewoyaa
Atlantic Lithium Ltd's interim chief executive Len Kolff joins Proactive’s Andrew Scott over the air to discuss more broad, high-grade lithium results from its flagship Ewoyaa Lithium Project in Ghana, West Africa.