ASX Futures pointed down this morning, but the market has fluctuated today and is currently slightly higher.
The S&P/ASX200 closed just 2.70 points today to 7,023.30. Over the last five days, the index has gained 0.36%, but is down 5.66% for the last year to date.
The top performing stocks in this index were Megaport Ltd (ASX:MP1) up 9.54% and Domain Holdings Australia Ltd up 8.42%.
Megaport bounced on impressive additional detail in its FY22 report that UBS said "helps build bridge to future accelerating growth".
UBS stated in a broker note, "good additional detail around cohort analysis, LTV/CAC, PartnerVantage training" and "strong ongoing growth in rev/customer within cohorts, reducing levels of churn after two years within a cohort, and improving pipeline for PartnerVantage sales force."
Megaport’s revenue was up 40% to $109.7 million from FY21 and the MRR (monthly recurring revenue) was up 42% to 10.7 million from FY21. Total number of customers grew by 16% to 2,643.
Chairman Bevan Slattery said, “With the continued migration of enterprise workloads from siloed, on-premise infrastructure to hybrid and multi cloud architectures, cloud is now an undeniable force in almost everything we do. The question of whether a business will adopt cloud is no longer up for debate; it’s now a question of how many clouds they will adopt. In the face of rising global inflation, and ongoing supply chain issues, cloud services are proving to be a critical means of growing and scaling businesses. The ability to minimise costs, deploy with a capital-light strategy, and enable rapid services gives businesses the edge they need through dynamic and shifting economic climates.
“This massive growth in cloud adoption is fuelling an ever-increasing dependence on critical communications infrastructure as data traverses between end users and public and private cloud locations. Megaport was built to solve this problem and founded at the junction where network infrastructure and operations meets next generation software and automation. Our industry leading Network as a Service platform was built for scalability – with global multi-terabit capacity that reaches 25 countries. More than a means of scaling cloud connectivity, Megaport has become a fundamental part of solving for cloud interoperability. With services like Megaport Cloud Router (MCR), our customers directly connect public clouds together – all without the need to procure or deploy hardware. This means customers can simplify their operations while ensuring their multi cloud environment performs and scales.”
In the news today
Household spending surged 10% in June
Households spent their hard earned on transport, hospitality and clothing, despite June’s weak consumer confidence.
The Australian Bureau of Statistics reported a 10.2% increase.
“This was off the back of consistent decreases in total household spending from March 2020 to February 2021, as responses to COVID-19 were experienced across the country," ABS head of macroeconomics statistics Jacqui Vitas said.
“Spending categories most impacted from Covid-19 responses (transport, hotels, cafes and restaurants, and clothing and footwear) have now returned to pre-pandemic levels.”
Transport spending increased by 22.7%, driven by higher petrol prices and demand for air travel, while spending on hotels, cafes and restaurants was up 17.1%, clothing and footwear was up 16.3% and recreation and culture rose 15.5%.
On the lower end of the scale health jumped just 0.8%, alcohol and tobacco was just 0.9% higher and food was up 1.8%.
Speaking of consumer confidence, it took a 4.5% fall.
ANZ head of Australian economics David Plank said consumer confidence is at its lowest rate since the pandemic started in April 2020.
"So far in 2022, household spending has been robust despite very weak consumer sentiment, with strong employment gains, high levels of household saving and a desire to travel more than offsetting concerns about the rising cost of living
"It remains to be seen whether this divergence between confidence and spending can continue. Certainly, we expect employment to remain robust through 2022 and wages growth to pick up. This may be enough to keep households spending, even if they feel wary about the outlook."
Citi deems oil markets more bearish
Analysts at Citi have called markets affecting oil more bearish than expected. Prices have fallen 30% from March peaks and US demand heads towards 20-year lows.
Analysts noted overall conditions to be more bearish than standing fourth quarter price forecast of $US85 (Brent) and $US82 (WTI). Underlying prices point to higher supply and lower demand.
This is partly due to record high oil prices forcing US drivers off the road during the usual summer holiday commute.
"There has been no real summer driving season, as vacationers look to have rationed travel and/or improved efficiency, with VMT and mobility data down, but implied/apparent demand data particularly so," Citi analysts said.
"US gasoline demand looks to be at 20-year lows, not just below 2021 levels. US gasoline inventories have recovered to the low end of the historical."
City noted that if the US was to fall into recession, oil could fall to $US60 by the end of the year.
"A recession scenario with rising unemployment and household and corporate bankruptcies could lead to commodities demand declining and surpluses develop, leading to commodities chasing down a falling cost curve as costs deflate and margins turn negative to drive supply curtailments."
Here’s a look at some of the top small cap stories of the day.
Clean TeQ Water shares rise after signing license deal for mine waste dewatering technology
Clean TeQ Water Ltd (ASX:CNQ) shares rose 6% intra-day to $0.62 after signing an exclusive global technology licence agreement with Soane Labs LLC for its Accelerated Dewatering Technology, known as ATA™.
Tempus Resources surges upon delivering ‘best intersection ever’ with bonanza gold grades up to 523g/t at Elizabeth Project in Canada
“We have a phenomenal start, with drill-hole EZ-22-03 reporting the highest-grade intersections we’ve ever seen at Elizabeth,” said Tempus Resources Ltd (ASX:TMR, TSX-V:TMRR) president and CEO Jason Bahnsen.
Valor Resources identifies six high-priority uranium drill targets at Hidden Bay in Canad
Valor Resources Ltd (ASX:VAL) has identified six high-priority drill targets from its recent airborne gravity survey and historical data review of the Hidden Bay Uranium Project.
Noxopharm CEP-2 sarcoma trial passes Safety Steering Committee milestone
We appreciate the contributions the eminent clinicians at our trial sites are making towards our goal of developing an effective treatment for this often-fatal group of cancers,” Noxopharm Ltd (ASX:NOX) CEO Dr Gisela Mautner said.
Tempest Minerals begins “transformative” journey to gold producer status with Lole Mining acquisition
"We have identified this fantastic opportunity to drive growth by positioning ourselves as a near term gold producer with associated revenue stream and by adding high potential exploration ground to the portfolio," Tempest Minerals Ltd (ASX:TEM) MD Don Smith said.
On your six
What’s happening with base metals? They have generally had a good run and will look to continue the run despite inflation.
Base metals continue to shine during quarter despite inflation pressures
Over the last few years, battery-related base metals like copper and nickel and green energy-linked minerals like zinc have experienced a strong uptick in growth, only recently peaking as global inflation applied downward pressure to the commodities market.
The one for good luck
Battery and energy metals stocks becoming more critical as demand increases and supply falls
While we are not heading toward a Mad Max-style breakdown of society due to lack of resources, to feed the need for battery metals supply, the world needs more resources and better strategies to manage them.