Unemployment Rate Creeps Higher in January

What made the news today?

• Tech climbs with risk-on assets climbing higher overnight

• AMP Capital gets hammered

• Sonic increases after earnings report

• Magellan shares rise despite 60% profit drop

A much needed rebound for the ASX 200 today supported by retailers, technology, and real estate. The ASX200 finished 58.10 pts or 0.79% higher to close at 7,410.30. The market pushed higher in the afternoon after higher than unexpected unemployment figures were released today, more on that below.

There were 8 out of 11 sectors which gained in value today. The sector with the best performance was Consumer Discretionary which was up +2.74%, while Utilities was the worst performer, dropping by 1.43%.

Wesfarmers (+4.2%) and a general uptick among battered retail companies helped discretionary stocks trade higher today. Another strong sector was technology, with noteworthy standouts being Block (+9.2%), Xero (+3.6%), and Wisetech (+2.7%).

Orora and Sonic Healthcare had the best performances in this index, rising 14.83% and 14.25%, respectively.

Quick Singles

• Magellan Financial Group Ltd (ASX: MFG) share price has risen 6.4% to $10.05 despite a a reporting a 60 per cent decline in interim net profit from $293.7 million to $98.3 million and average FUM falling from $112.7 million to $53.8 million.

• Telstra Group Ltd (ASX: TLS) share price increased by 1.9% to $4.22 after reporting a 25% increase in Net Profit.

• Perenti Ltd (ASX: PRN) share price decreased by 9.5% to $1.09. This followed reports of an event at the underground Dugald River mine in Cloncurry, Queensland.

Economic News

In January 2023, retail sales in the United States surprisingly increased by 3% month-over-month, the largest gain since March 2021 and well beyond market expectations of a 1.8% increase.

The rate of capacity utilisation in the United States decreased to 78.3% in January 2023, from a downwardly revised 78.4% in December, and significantly below the 79% predicted.

Industrial Production in the United States climbed 0.8% annually in January 2023, the smallest increase since the recovery from the pandemic began in March 2021.

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Top Story

Australian Unemployment Rate Increases to 3.7% in January

According to data released by the Australian Bureau of Statistics (ABS) on Wednesday, the seasonally adjusted unemployment rate in Australia rose to 3.7% in January, with employment decreasing by around 11,000 people and the number of unemployed increasing by 22,000 people. This was the second consecutive monthly fall in seasonally adjusted employment following strong growth during 2022.

Bjorn Jarvis, head of labour statistics at ABS, explained that January is the most seasonal time of the year in the Australian labour market, with people leaving jobs and also getting ready to start new jobs or return from leave. This January, more people than usual with a job indicated they were starting or returning to work later in the month.

Along with a larger-than-usual increase in unemployed people in January, there was also a similarly larger-than-usual rise in the number of unemployed people who had a job to go to in the future. However, the employment to population ratio fell between December and January, down 0.2 percentage points to 64.0%, although it was still 0.5 percentage points higher than January 2022 and 1.6 percentage points higher than March 2020.

The seasonally adjusted participation rate also fell 0.1 percentage point to 66.5% in January, down from the series high of 66.8% in mid-2022. Overall, the latest data indicates a slowdown in the employment market, with the impact of the ongoing pandemic likely to continue to affect the job market in the near term.

Movers and Shakers

✅Biggest Winners

Bapcor (ASX: BAP) share price was up 5.2% to $6.53. following the release of the auto parts retailer's half-year results. Bapcor reported an increase in pro-forma net profit after tax of 2.3% to $146.3 million and an increase in revenue of 11.2% to $1 billion. Both were historical records. Bapcor increased its interim dividend by 5% to 10.5 cents per share.

Sonic Healthcare (ASX: SHL) shot up by 14.3% to $33.20. Sonic reported a 50% rise in Net Profit to $382m against FY20 which was in the pre-pandemic area. Business revenue increased by 9% against the same period.

❌ Biggest Losers 

AMP (ASX: AMP) share price was down 13.4% to $1.14. AMP reported half-year earnings today and shareholders have been quick to get to the exit gates after the company reported a 34% drop in underlying net profit after taxes to $184 million.

Evolution Mining (ASX: EVN) share price decreased by over 2% to $2.97. Despite a 13% rise in EBITDA to $446 million, the gold miner opted to reduce its dividend to 2 cents per share. This dividend, according to the management, strikes a balance between capital investment and balance sheet management, as well as investor returns.

Crypto Corner

Conflux Network to collaborate with Chinese telecom to develop blockchain-based SIM cards.

According to a tweet on Wednesday, blockchain protocol Conflux Network will collaborate with China Telecom, the second-largest wireless carrier in China with an estimated 390 million subscribers, to develop blockchain-based SIM cards. Conflux Network said that China Telecom will start the first BSIM pilot program in Hong Kong later this year. This will presumably be followed by experimental programs in major cities on the Chinese mainland, such as Shanghai.

The BSIM card will manage and maintain the user's public and private keys on the card, as well as perform digital signatures without allowing the private key to leave the card. Additionally, the BSIM card supports encrypted storage and key retrieval. Conflux stated that users who migrate to BSIM cards will be able to store digital assets securely, transfer digital assets easily, and display digital assets in a range of applications.

Conflux is a quick and inexpensive blockchain that promises to be the only Chinese public blockchain that complies with regulatory requirements. Conflux has engaged on blockchain and metaverse efforts with multinational businesses and government agencies in the region, including the city of Shanghai, McDonald's China, and Oreos. Following news of the China Telecom agreement, Conflux's native CFX coins rose more than 20%.

Economic Outlook

A busy week on the economic calendar with the US CPI read on Tuesday the big item investors will be watching with housing data the other key metrics.

17th February

• US Jobless Claims (est. 200k)

• US Housing Starts number (est. 1.36M)

• US Building Permits (est. 1.35M)

• US Producer Prices (est. 4.9%)

• US PPI Inflation (est. 5.4%)