The Match Out: ASX ticks higher ahead of CPI, KMD Brands tumbles

Resilience was shown on the ASX again today, continuing the relief rally that kicked off yesterday. Commodity-linked stocks were once again the main focus with follow-through buying on the back of China’s support of their property sector. Energy was the key standout though thanks to signs that Russian production had started to slow and comments from the Saudis supporting the OPEC+ actions to stabilize oil markets. In a shift away from recent history, tech was the laggard on the local market today. All eyes will be on the US Inflation data due out at 10.30 pm tonight.

• The ASX 200 finished up +26pts/ +0.38% at 7135
• The Energy sector (+1.96%) was the best on ground with Materials (+1.00%) the other key outperformer
• Healthcare (-0.64%) was the weakest sector, joined by Tech (-0.50%) and Utilities (-0.09%) closing lower.
• US Inflation data is due out tonight with expectations of the headline rate to fall to 3.2% (from 4%) and core inflation to slide to 5% (from 5.3%).
• KMD Brands (ASX: KMD) -9.28% struggled on a soft trading update ahead of their 31 July year-end. More on that below.
• Incitec Pivot (ASX: IPL) +5.42% noted inbound interest for their fertilizer business. The company is in the process of splitting into explosives (Dyno Nobel) and Incitec Pivot Fertilizers.
• EML Payments (ASX: EML) +11.59% had its best day since April on strong volume. No news however the company has previously flagged a review of its operations which usually leads to a breakup and/or takeovers. Investors positioning for the news ahead of their results next month.
• Iron Ore was up 2% in Asia, with FMG the strongest mover in the space, adding +2.49%
• Gold continued to tick higher today though gold stocks were mostly lower.
• Asian stocks were mixed today, the Nikkei (-0.80%) and China (-0.5%) lower, but the Hang Seng was strong (+0.92%)
• US Futures are pointing to small gains across the big 3 indices tonight. S&P futures are up marginally.

ASX 200 chart

KMD Brands (KMD) 88c

KMD -9.28%: the NZ-based retailer slipped to a 9-month low after flagging a soft finish to the 31 July year-end. KMD, which owns Kathmandu and Rip Curl, said they expect a record year for sales of $NZ1.1b, up from last year’s $980m but around 5% short of expectations. This fed into a larger miss on EBITDA expectations with the company expecting $NZ105-110m, around 15% short of market expectations. The announcement pointed to a slow start to Q4 with weakening consumer spend and a warm winter weighing on Kathmandu sales. We like the KMD business, however, it is likely to take some time before the market adjusts expectations to realistic levels after today’s update.

Broker moves

• Capitol Health Cut to Market-Weight at Wilsons

Major movers today

Have a great night,

The Market Matters team.

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