Little by little, market recovery continues, James Hardie upgrades, Bramble’s bid halted

The domestic market is slowly chipping away at recent losses, with the S&P/ASX200 gaining another 0.3 per cent on Tuesday behind a rally in the energy and utilities sectors.

The energy sector was buoyed another 2 per cent by a rally in the oil price amid signs that Chinese demand may recover, with both Woodside (ASX: WPL) and Santos (ASX: STO) adding 2 per cent.

Six sectors we lower, most of which fell by more than 1 per cent, with industrials, healthcare and property the hardest hit.

Yesterday’s biggest winner Brambles (ASX: BXB) quickly became today’s biggest loser with the share price falling 7.6 per cent after management confirm that private equity group CVC would not be proceeding with a bid for the company.

Lithium and rare earth miners were a highlight after the Federal Government splashed another $20 million on Pilbara (ASX: PLS) and Calix (ASX: CLX) as they commit to supporting Australia’s growth in modern manufacturing and on-shore metal processing.

Shares in foreign currency transfer group Oz Forex (ASX: OFX) surprised, gaining more than 8 per cent after management reported income growth exceeding 25 per cent which will contribute to a 50 per cent jump in earnings.
 
James Hardie upgrades passes on costs, United Malt downgrades, Nickel deal to proceed
 
Shares in building products supplier James Hardie (ASX: JHX) reversed recent gains, falling 3.6 per cent, despite management reporting a 20 per cent jump in sales in the fourth quarter to USD$968 million.

Earnings are also increased by more than 30 per cent as management passed on input costs increases twice during the year in an effort to maintain their strong profit margins.

The full-year profit was an incredible 75 per cent higher than 2021. It was a similar story for United Malt Group (ASX: UMG) which was spun out of Carlton and United Breweries, who reported a 5 per cent falling earnings despite an 11 per cent increase in revenue to $652 million.

Net profit was just $10 million with management blaming the surging costs of inputs including barley along with supply chain issues.

In a sign of the challenges that lay ahead, consumer confidence fell to the lowest point since 2020’s lockdowns, falling 1.3 per cent, following the increase in interest rates and growing headlines about inflation.

IGO (ASX: IGO) appears to be nearing acceptance of their increased bid for Western Areas (ASX: WSA) something that was disrupted by the events in Ukraine, despite complaints that it was a ‘not fair but reasonable’ price for the business.
 
Rally continues on strong retail sales, Walmart slides, Twitter deal in reverse
 
After nearing a bear market, measured by a fall of 20 per cent, all three US benchmarks are showing signs of recovery, led by the Nasdaq which gained 2.8 per cent overnight.

The S&P500 and Dow Jones were up 2 and 1.3 per cent respectively as a number of major retailers released quarterly sales data.

Retail sales more broadly appear to be weathering the inflationary storm, up 0.9 per cent in April, however, shares in Walmart (NYSE: WMT) fell by more than 11 per cent after reporting a close to 25 per cent fall in profit and 2 per cent fall in revenue.

The retail chain is a place where normal Americans shop meaning it offers an insight into the real economy which didn’t look great.

Shares in both Twitter (NYSE: TWTR) and Tesla (NYSE: TSLA) gained as Elon Musk continued his crusade to renegotiate the takeover deal, this time citing concerns about fake accounts on Twitter and an unwillingness to buy without knowing how large they were.

Drew Meredith

Drew is publisher of the Inside Network's mastheads and a principal adviser at Wattle Partners.