GLOBAL MARKET WRAP

The S&P 500 fell 11pts yesterday to close 0.2% lower at 5,597, as index took a breather after an eight-day recovery rally. The Energy sector was the weakest performer (-2.7%). The US 10-year treasury yield fell 6bps to 3.81%, while the US Dollar contracted 0.4% $101.4410.
 

LOCAL MARKET WRAP

The ASX 200 rose 17pts yesterday, closing 0.2% higher at 7,998. The Technology sector was the strongest performer, up 1.3%, with six of the eleven sectors finishing in positive territory. The SPI Futures Index is pointing 44 points lower this morning at 7,897. The 10-year treasury yield rose 3bps to 3.95%, while the AUDUSD rose 0.2% to 0.6745 this morning.

Dexus Limited (DXS) yesterday reported a weak FY24 result, framed by a 12.9% fall in portfolio value or $1.9 billion, with AFFO of 48c also missing expectations. FY25 likely to see further weakness with AFFO guidance of 44.5-45.5c. Office and Industrial weakness came on the back of divestments, partly offset by fixed rental increases while income from AMP Capital platform assisted it co-investment segment results. Pro-forma gearing up 41bps to 32% but within the 30-40% target. Office occupancy down 11bps to 94.8% with ~30% of portfolio set to expire between FY25-27. Industrial occupancy down 22bps to 96.8%. Maintenance & leasing capex up 2% to $187 million on lessor works and impact of higher incentives with cash flow from operations down 20% to $613 million. Flagged ~$2 billion in divestments across FY25-27 with a focus on transitioning balance sheet with more exposure to industrial & infrastructure with <50% exposure to any one sector. DXS shares fell 8.9% to close at $6.83.

ARB Corporation limited (ARB) yesterday reported a solid FY24 result, sales up 3.3% with PBT up 15.8% driven by improved gross margins on favourable product mix and operational efficiency. Inflationary pressures on cost base have eased though FY24 although soft exchange rate persists. Sales accelerated in 2H24 following the resolution of industrial disputes across AU ports while noting challenging conditions in US, export sales down 6.5%. ARB’s OEM segment saw revenue up 40% vs pcp while its biggest segment, AU aftermarket saw modest growth of 5.4% driven by improved vehicle availability and improved fitting capacity. New vehicle sales remain strong up 12.6% vs pcp supporting outlook. Aftermarket order book remains solid with export book trending positively. Sales to OEMs likely to continue in FY25 with potential M&A flagged aimed at product distribution and expansion. ARB shares rose 5.2% to close at $42.32.

Source: Lonsec Equities Update 21.08.2024