Markets dip after higher than expected Inflation

CPI data dominated the news day Wednesday, with the market starting the day strong before dropping sharply as the annual CPI for the December quarter came in at 7.8 per cent, above analysts' consensus of 7.5 per cent. The Tech sector felt the brunt of the drop, falling by 1.20%. The ASX200 ended the day down 22.1pts to 7,486.30.

The Energy sector fell the most on the day, dropping by 1.21%, followed by the Tech sector and Materials (0.74%). Utilities led the way of the four sectors which gained on the day, climbing by 0.49%.

Both West African Resources Ltd. and Evolution Mining Ltd. saw their share prices fall by 7.48% and 5.87% respectively, making them the worst-performing stocks on the index.

Quick Singles

• New Zealand's fourth-quarter CPI climbed 1.4%, exceeding analysts' expectations. This compared to an increase of 2.2% in the preceding quarter. The annual rate of inflation was unchanged at 7.2%.

• Mineral Resources Ltd (ASX: MIN) share price fell 2.2% to $94.2 following the release of its Q2 activities report. Mineral Resources reported shipment of 4.1m wet metric tonnes of Iron Ore in the quarter

• Atlas Arteria Ltd (ASX: ALX) saw its share price fall 0.2% to $6.77 following the release of its Q4 FY22 revenue and traffic results. Atlas reported total Weighted Average traffic in the quarter was 2.5% down from the prior year however, revenue was 0.3% higher

• News Corp (ASX: NWS) share price increased 6.3% to close at $29.93 after the company announced it will not merge with Fox Corporation and disclosed it is in discussions to sell its Move, Inc subsidiary.

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Top Story

December CPI Comes in Hot

Australian inflation for the last quarter of 2022 increased by more than economists' expectations, almost making it certain of another rate rise when the RBA meets on the 7th of February.  

The Australian Bureau of Statistics released figures on Wednesday that showed that the consumer price index (CPI) was 1.9% for the December quarter. The annual rate increased to 7.8% from 7.3%, the highest since 1990 and far quicker than the rate of wage growth.

Externally, economists and the Reserve Bank are in agreement that this is the pinnacle of headline inflation. However, the extent to which inflation has gotten ingrained in the system is the greater unknown at present.

A short summary of the inflation report:

• Headline inflation: +1.9% q/q (+1.7% est.) and +7.8% y/y (+7.6% y/y)

• Trimmed mean inflation: 1.7% q/q and 6.8% y/y

• Electricity was the single largest contributor, increasing 8.6% q/q.

• Home construction expenses led reductions, falling 1.7% q/q.

• All major cities experienced an increase in inflation, with Perth experiencing the greatest increase (+3.6% q/q).

Movers and Shakers

✅Biggest Winners 

Winsome Resources Ltd. (ASX: WR1) share price increased 18.1% to $2.25. This comes after reports that the Adina pegmatite's strike length may have risen to 1,600 meters, with step-out drilling encountering spodumene-bearing pegmatite nearly one kilometre to the east of previously reported intersections. Adina currently has a second drill rig in operation to expedite the expanded drilling program. Results from the analysis of samples from prior drilling with visible lithium mineralization in the core are anticipated soon.

Accent Group Ltd. (ASX: AX1) share price was up 10.2% to $2.11 following a positively received trading update from the footwear and apparel company on Wednesday. Accent said that first-half total sales increased by 33% to $825 million from the pcp. This is anticipated to result in earnings before interest and tax (EBIT) for the first half of the year increasing from $30.3 million to between $90 and $92 million.

❌ Biggest Losers 

St Barbara Ltd (ASX: SBM) share price fell by 21.4% to $0.70 after the gold miner's release of yet another discouraging quarterly update. The company produced 60,976 ounces of gold over the three months that ended on December 31 at an all-in-sustaining cost of A$2,666 per ounce

Best & Less Group Holdings Ltd (ASX: BST) share price fell 6.6% to $1.97. following the release of a trading update. Despite a 13% increase in half-year revenue, the company anticipates a first-half profit after taxes of $13.7 million. Due to considerable margin pressure, this would be a decline of 32% compared to the previous period.

Small-Cap of the Day

Laybay Holdings requests ASX removal

SKY Metals (ASX:SKY) shares ended the day 34% higher to $0.067 after announcing that it had re-assayed a large quantity of rare earth element (REE)-bearing drill core from its Doradilla project in New South Wales and found widespread, thick REEs across all three tin deposits.

Highlights from the drill site include 33m at 4981ppm (0.50%). A TREO reading of 8781 ppm (0.88%) from 12 meters. From a distance of 25 meters, maintain TREO in all directions.

According to the findings, the entire 16-kilometre strike length of the so-called DMK system — much of which has not been examined for REE — is likely to include several kilometres of shallow REE mineralisation.

Econcomic Calender

Outlook

US housing data and durable goods data will close out a busy week of economic news

26th January

• US Jobless claims

• US Durable goods

• US Single home sales

28th January

• US Pending home sales

That's it from the team at ASX-News today. We hope you enjoyed our EOD wrap-up. Good night and happy investing!