The Morning Report

Tuesday 05/07/2022

OVERNIGHT GLOBAL MARKET WRAP

US markets were closed yesterday in accordance with the Independence Day holiday. The US 10-year treasury remained flat at 2.88%, while the USD Index remained unchanged at 105.13.

China: The PMI services index is expected to come in at 49.1 for June, up from 41.4 in the prior month.

UK: The PMI composite index is expected to come in at 53.1 for June, unchanged from May,

Germany: The trade balance came in at a €0.5B surplus for May, down from a €1.3B surplus in April, against expectations of a €1.2B surplus.

LOCAL MARKET WRAP

The ASX 200 rose 73pts yesterday to close 1.1% higher at 6,613, with the Energy sector the strongest performer (2.6%). The SPI Futures Index are trading 1pt higher this morning at 6,568. The 10-year treasury yield fell 4bps to 3.56% and the AUDUSD rose 0.7% to 0.6865 this morning.

Link Administration Holdings Limited (LNK) revealed yesterday its Board would not be able to recommend Dye & Durham’s revised $4.30 per share offer for control of the company. Dye & Durham reduced its offer price down from $5.50 per share to reflect a potential undertaking with the ACCC to obtain its approval, as well as changes in market valuations of PEXA, Link and the broader market. LNK will continue to engage with Dye & Durham as to whether an agreement can be reached. LNK has postponed its Special General Meeting from 13 July to a date yet to be determined. LNK shares fell 0.26% to close at $3.79.

Suncorp Group Limited (SUN) provided an update yesterday in relation to the weather events impacting NSW and parts of South-East Queensland. CEO Steve Johnston said that the group had dealt with 35 separate events and over 120,000 natural hazard claims across FY22 at an expected cost of approximately $1.1 billion. With this being inline with previous guidance figures. Looking ahead, SUN said that it expects its FY23 natural hazard allowance to increase to $1,160 million, reflective of the changes to the reinsurance program and the FY22 hazard experience. SUN shares rose 0.73% to close at $11.02.

The Australian cash rate is expected to be raised 50bps to 1.35% in today’s July meeting, up from the current rate of 0.85%. This follows a 50bp increase to the cash rate in the June meeting, as pressure increased on the RBA to return inflation to within the targeted range.

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