The ASX had a negative end to July but still wound up higher overall, notching up its longest monthly winning streak since the 2007 mining boom. The Australian sharemarket backtracked on the month’s last trading day, mainly due to an iron ore major, which alone shaved more than 13 points off the benchmark S&P/ASX200 index.
The index closed 0.33 percent lower at 7392.6 after a choppy session, while the All Ordinaries Index dipped 0.4 percent to 7664.2. While it was a negative end to the week, CommSec market analyst James Tao said the S&P/ASX200 had gained more than one percent in July, the tenth straight month of improvements. That’s the longest winning streak since the 2007 mining boom.
So far this calendar year, the ASX has risen more than 12 percent. Fortescue was the biggest weight on the local bourse, slumping 5.29 percent to $24.91 after Goldman Sachs issued a “sell” recommendation for the iron ore miner, pointing to higher than expected capital expenditure this financial year, outlined in yesterday’s June quarter production report.
Goldman Sachs was also critical of uncertainties around its Fortescue Future Industries renewables diversification, “with very little disclosure on projects and the benefits,,,” and is concerned about execution and ramp-up risks on the Iron Bridge project, which has already had cost blowouts. It followed a more than 3 percent tumble in the iron ore price yesterday.
OMG chief executive Ivan Tchourilov noted Fortescue had gained more than 10 percent for the month when the overall materials index rose by more than 7 percent. “Our traders were happy to take profits, as it topped our most-sold stocks for July,” he said. BHP appreciated 0.3 percent to $53.49 while Rio Tinto declined 0.56 percent to $133.42.
Tech stocks were also among the losers, with Afterpay dropping 5.28 percent to $96.66, fellow buy-now-pay-later provider Zip shedding 4.32 percent to $6.64, and logistics software provider Wisetech Global retreating 2.29 percent to $30.79.
In the energy sector, Origin plunged 7.85 percent to $4.11 after slashing $1.57bn from the book value of its business, saying there had been a significant reduction in wholesale electricity prices and a contraction in the near-term gas earnings due to higher procurement costs and subdued business customer demand.
It also expects a $669m tax expense relating to its Australia Pacific LNG project in Queensland. Origin also flagged lower underlying earnings for the 2022 financial year, warning that considerable uncertainty in economic conditions and increased volatility in commodity markets continued. Macquarie Research described the update as “ugly”.
“This is at least the third downgrade this year,” it said. Moody’s Investors Service said Origin’s deteriorating energy markets guidance was credit negative. Mr. Tchourilov noted lithium producers Galaxy Resources and Orocobre tracked higher, rising 3.56 percent to $4.66 and 3.38 percent to $8.25, respectively.
“Increasing commitment to accelerate the development of a lithium battery supply chain, paired with positive quarterly reporting from electric vehicle manufacturers (notably Tesla), has seen analysts upgrading the lithium demand forecast,” Mr. Tchourilov said.
Shares in Pilbara Minerals, which jumped more than 30 cents this week, remained suspended pending a court application regarding the late filing of documentation relating to the issue of shares, which the lithium miner blamed on an administrative oversight. Mr. Tchourilov noted Western Areas, which mines nickel – also used in EV batteries – also bumped higher on the back of positive 2022 financial year guidance. Western Areas shares appreciated 3.97 percent to $2.62.
Ampol announced it had entered into a funding deal with the Australian Renewable Energy Agency to deliver a fast-charging network for EVs, spanning more than 100 sites covering the Greater Sydney, Melbourne, Brisbane and Perth regions, as well as Newcastle, Wollongong, Central Coast, Gold Coast, Sunshine Coast and Geelong.
Shares in Ampol dipped 0.8 percent to $28.25.
Retailer Mosaic Brands, which owns fashion chains including Katies, Rockmans, and Rivers, reported a full-year record net margin, online sales growth, and slash debt. However, it withdrew its fiscal 2022 guidance, which had previously been provided subject to no further lockdowns.
Mosaic shares leaped 8.33 percent to 52 cents. The Federal Court ruled against Qantas over outsourcing about 2000 ground staff last year after the Transport Workers Union alleged the national carrier took advantage of the Covid-19 pandemic to eliminate the largely unionized group. The airline said that had not been proved and it would appeal the decision, saying the union’s call to reinstate the jobs gave the ex-staff “false hope” as it would fight any court orders to that effect.
Qantas shed 0.65 percent to $4.59.
Mr. Tchourilov said Flight Centre was among the top five most bought stocks by his clients this month, with investors appearing bullish on economic recovery.
Flight Centre shares added 3.08 percent to $15.05.
Marley Spoon plummeted 21.5 percent to $2.19 after releasing a report after the ASX closed on Thursday, showing labor shortages and unprecedented weather disruptions had hit its US business. Still, the Berlin-headquartered meal kit delivery service maintained its full-year net revenue guidance.
ANZ was four cents softer at $27.71, Commonwealth Bank gained 0.2 percent to $99.65, National Australia Bank put on 0.62 percent to $25.93, and Westpac was unchanged at $24.52. The Aussie dollar bought 73.79 US cents, 52.89 British pence, and 62.08 Euro cents in afternoon trade.