Good Evening,

Welcome to the ASX News Daily Recap.

Lost track of what happened on the market today?

Don’t stress. We’re here to catch you up.

Here’s a sample of what you may have missed:

1. 📝 Earnings Kick-off - Link, Pinnacle & Downer Report

2. ⬇️ U.S. Credit Rating Downgrade

3. 🪙 Binance in the regulator’s eye

4. 🛏️ Bed, Bath & Beyond is back

5. 🤖 AI-Powered Chatbots

The Recap

ASX Tumbles As

Earnings Season Swings into Gear

It was another tough day on our market after a terrible night for Wall Street, which recorded its worst one-day performance since April. The ASX200 didn’t fair as poorly, falling by as much as 67 pts. in the morning to end Thursday’s session down -0.58% or 42.7 pts. to 7,311.70

A quieter day on the news front locally, with a small handful of companies posting earnings results or guidance.

Iron ore futures have continued to retreat, down another 1.9% at $US101.95 a tonne for September contracts

10 of the 11 sectors fell today, with Tech (-1.63%) and Materials (-1.06%) dragging markets down, with a shift to defensive sectors in Staples (-0.01%) and Telco (+0.19%), with the latter the only one to end the day in the green.

Wall Street

It was red across the board on the U.S. market overnight, with the worst one-day performance since April, as investors took some profits off the table after a bumper start to 2023. Investors may also be worried that the economy is not slowing down quickly enough, with a robust July payroll data report exceeding expectations.

The S&P500 ended the day down 1.38%, whilst the NASDAQ fell by 2.17%. Bond yields rose, with the 10-year yield climbing to 4.09% and the 30-year yield to 4.18% - the highest points since last November. 

The top story overnight was that rating agency Fitch downgraded their U.S. credit rating to AA+ from AAA, with Fitch citing an "erosion of governance" in the U.S. that has “manifested in repeated debt limit standoffs and last-minute resolutions.” More on that later.

Earnings Recap:

• Albemarle shares rose by nearly 5% in after-hours trade on increased Lithium demand, providing earnings guidance growth of 40% - 50% in net sales with the global shift to electric vehicles to thank.

• CVS beat quarterly results but lowered its earnings outlook for FY24 and FY25. CVS said that a rise in medical expenses in its insurance unit would see profit fall to between $8.50 - $8.70 per share in FY24.

• Mercado Libre rose by over 5% in after-hours trading after reporting a 57% increase in revenue during Q2, which was above analyst estimates. Net Income more than doubled to $261.9 million.

• Qualcomm provided a weaker-than-expected revenue outlook of $8.1 billion - $8.9 billion in Q4. Analysts’ mid-point estimates were at $8.79 billion. Potentially a sign that smartphone sales demand will continue to be weaker.

• RobinHood reported Q2 revenue of $486 million, above estimates of $474 million, with a positive net income of $25 million or $0.03 EPS.

• Paypal sunk by over 7% in after-hours trading after reporting shrinking operating margins to 21.4% in Q2 from 22.7% the previous qtr. The company blamed increased losses in the business-loan portfolio for the drop.

• Shopify rose in after-hours trade after beating Wall St. revenue estimates for Q2 with a 31% increase YoY to $1.7 billion - above estimates of $1.62 billion. GMV was 17% above the PCP to $55 billion.

• Zillow shares fell marginally after hours with a weaker housing outlook dampening forecasts; Q3 revenue is projected to be $458 million - $486 million. Q2 revenue of $506M did beat estimates of $472.9M.

The day everyone has been waiting for, the two heavyweights Apple and Amazon report earnings overnight. Amgen, Airbnb, Booking.com, Conoco Phillips and Stryker are just some of the other companies to report.

Economic News

The U.S. ADP Nonfarm payroll change was higher than expected, with 324,000 new jobs added in July - well above forecasts of 189,000.

The Bank of England meets tonight, where another rate hike is expected. Analysts are split as to whether it will be 25bps or 50bps.

Sponsorship

Love A Good Stat?

Stat Significant is a weekly newsletter featuring data-centric essays about culture, economics, sports, statistics, and more.

Are Best Picture winners getting worse? Is Christmas season coming earlier? What is the dollar value of a yard in the NFL?

Subscribe for free to find out!

Charts and Prices

Index & Commodity Prices

ASX By Sector

ETF Watch

Quick Singles

🪃 Local News

• Downer EDI fell by almost 4% after it announced a $549 million impairment resulting from an asset review, with anticipated net losses of $386 million, including a $483 million non-cash goodwill impairment. Underlying NPATA is expected to be $174 million.

• Link expects to report FY23 revenue of around $1.23 billion and operating EBIT of $178.1 million, both an increase on last year. However, Link must recognise a provision of approximately $390.9 million (net of tax) related to settling its troubled UK business Link Funds Solutions, which is being sold to Waystone Group. Link Group, therefore, expects to report an FY23 Statutory Loss (after tax) of approximately ($417.7) million. In FY24, Link expects to recognise a gain of approximately $280.3 million (net of tax) on completion of the sale.

• Janus Henderson will pay a 60¢ quarterly dividend, consistent with past payouts. Q2 2023 saw significantly reduced net outflows compared to Q2 2022. Adjusted Q2 operating income was $US121.5 million.

• Pinnacle Investment Management announced FY23 results, reporting an NPAT of $76.5 million, a marginal increase from $76.4 million in FY22. However, diluted EPS saw a slight dip of 1% to 39.0 cents. Shareholders will receive a fully franked final dividend of 20.4 cents per share, marking a 17% rise from FY22.

• The ACCC will not conduct a review into the $1.5 billion buyout offer for United MaltGroup, according to potential buyer Malteries Soufflet.

🌏 Around The Globe

• Amazon Clinic now offers video doctor visits in all 50 states of the United States as Amazon expands its virtual care service.

• Bed Bath & Beyond returned online yesterday, a month after Overstock.com bought the brand out of bankruptcy. Overstock’s website was relaunched as BedBathandBeyond.com, which merges Overstock’s online business model and merchandise categories popular with Bed Bath & Beyond shoppers.

• Chinese overseas investment in metals and mining reached a record $10 billion in the first half of 2023 - an increase of 131% from the same period last year.

• Meta is reportedly developing a range of AI-powered chatbots with different personalities aimed at increasing user engagement on social platforms such as Facebook and Instagram.

• The U.S. Treasury will increase the size of its quarterly bond issuance to $122 billion in long-term securities next week, higher than dealers were expecting.

   

📧 Know someone who’ll enjoy this content? 📧

Forward them this email so they can Sign-up

Movers and Shakers

✅ Biggest Gainers

• Australian Strategic Materials (ASM) announced a five-year agreement with USA Rare Earth, LLC (USARE) to supply neodymium iron boron (NdFeB) alloy, with the deal beginning in 2024. The global demand for NdFeB magnets is predicted to grow by 7.5% annually from 2023-2040, mainly from the electric vehicle and wind power industries. ASM shares ended the day 5.6% higher to close at $1.71

• Tietto Minerals (TIE) reported a significant increase in gold production, reaching 11,600/oz at its Abujar Gold Mine in Cote d’Ivoire. This followed steady quarterly growth from 9,500/oz in March to 15,592/ oz in June. Tietto's cash and bullion surged by A$6M in July, totalling A$42.6 million. Production estimates for H2 2023 are between 105,000-120,000/oz gold at US$875-US$975/oz AISC. TIE closed 8% higher to $0.54.

🔻Biggest Fallers

• Solvar (SVR) saw a significant decline in share price today due to its FY24 NPAT guidance being lower than expected. The guidance range of $24m - $30m is a significant decrease compared to the $47.6m provided in the previous update for FY23. The company explained that this drop was due to the full-year impact of central banks' rate hikes. Despite this news, Solvar declared a final dividend of 9.0 cents per share, which is fully franked. The stock closed the day at $1.15, down by 34%.

• Lindian Resources (LIN) fell by 11.9% to $0.37 after announcing a maiden Mineral Resource Estimate (MRE) of 261 million tonnes at 2.19% Total Rare Earth Oxides (REO) in their Kangankunde Rare Earths Project in Malawi. The MRE includes 5.7 million tonnes of rare earth, with 1.2 million tonnes of neodymium-praseodymium (NdPr). Despite the positive announcement, the resource's inferred status and potential uncertainties in development may have been the cause for the fall in share price.

Crypto Corner

Binance Under U.S. Scrutiny: Regulators Weigh Options Amidst Fears of Crypto Market Fallout

Binance is under the scrutiny of the U.S. Department of Justice (DoJ) over potential fraud charges. However, U.S. regulators are treading cautiously due to concerns about the broader implications for the cryptocurrency market.

According to a report by Semafor, U.S. officials are apprehensive about the potential fallout of indicting Binance. They fear a repeat of the FTX incident in November 2022, where the exchange faced a bank run due to panic, leading to its bankruptcy and a significant loss in the crypto market's value. Given its stature in the industry, such an event with Binance could have even more severe consequences.

Earlier this year, Binance had already attracted the attention of U.S. officials. The Commodity Futures Trading Commission (CFTC) sued the company and its CEO, Changpeng "CZ" Zhao, for allegedly evading U.S. laws. Additionally, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance in June, accusing it of offering unregistered securities and operating illegally.

The potential indictment of Binance is not just about legal violations but also the ripple effect it could have on the entire crypto industry. The collapse of FTX last year, along with historical financial crises like the Lehman Brothers in 2008, underscores the risks of targeting systemically crucial institutions.

Given these concerns, U.S. officials are exploring alternative measures, such as imposing fines or entering into deferred or non-prosecution agreements with Binance. Such steps aim to hold the exchange accountable while minimising harm to consumers and the broader crypto market.

Crypto Price Watch

The Verdict

We left it to you to decide, and the results are in:

Poll Results

1. It's obviously a Bear 🐻 (50%)

2. Human in a poor bear suit disguise (50%)

It’s a tie. I guess we aren’t any closer to solving this mystery!

📊 Broker Ratings

• Control Bionics (CBL) - Downgraded to Hold from Spec. Buy (Morgans)

• Orica (OIR) - Upgraded to Buy from Neutral (Citi)

🗓️ Economic Calendar