Chapter 1: What is the main topic discussed in this episode?
A listener production.
Chapter 2: Why did the ASX 200 end its three-day winning streak?
A three-day winning streak comes to an abrupt end for the Aussie market.
And Aussie inflation data is in the spotlight tomorrow.
Good afternoon, I'm Steve Daglian.
I'm Laura Bessarati.
It's Tuesday the 26th of May.
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Chapter 3: What is the impact of Middle East developments on the ASX?
Welcome to the CompSec Market Update.
Well, Stevie, as you said at the outset, it looks like we're going to put an end to three straight sessions of improvements. The good news is we're not down by much, only easing by around a third of 1% ahead of the close this Tuesday afternoon, but still on track to snap three days of gains. We're up a little over 2% over the prior three sessions.
And look, this is all hinging on what's happening online. over in the Middle East. So investors are really weighing conflicting developments. We had reports that the US and Iran are discussing reopening the Strait of Hormuz, while at the same time, the US says it's carried out so-called defence strikes on Iranian missile sites and boats. So not really sure which way this is going.
Are they getting closer to a deal or are tensions ramping up?
Chapter 4: How did energy and materials sectors perform today?
Exactly right. And Reuters also reported that both Washington and Tehran are saying that they're still making progress on a memorandum of understanding that could halt the war and give negotiators 60 days to reach a final deal.
So there are some signs that they're getting closer, but as you say, still uncertainty of what that is going to look like, how much longer the Strait of Hormuz will remain shut. And just a reminder that this is an important shipping route that typically transports between 20% and 25% of global oil trade and
Chapter 5: What caused ASX Limited's significant drop in share price?
a significant amount of LNG and roughly around a third of the global fertilizer trade. So it's something that doesn't only just impact oil and fuel prices, but also other things like food, food prices potentially, you know, if this continues over the long term. And of course, we didn't get a lead from Wall Street, which was shut last night.
A bunch of other markets were also closed on Monday as well from the UK, Germany and also Hong Kong.
Yeah, so we didn't have much to go off in today's session. So I said yesterday it might be a bit of a nothing session and we only really had the developments in the Middle East to look to to sort of drive our markets. So look, initially we did see oil down by around 7% in overnight trade.
That's on the back of those hopes that they would come to a deal, but prices have since edged higher on those fresh US military operations in southern Iran. So for some of the day, we did have energy stocks being the only bright spot across a sea of red across 10 of the other sectors. That's changed now. The energy sector is down by close to 1%, but the materials sector is
is now the only bright spot, but it's only just edging higher by roughly a tenth of 1% and all of the other sectors are lower.
Yeah. And if we look at the ASX 200 over the course of the day, I mean, the market did actually fall quite sharply in the opening hour of trade. And then we've kind of gradually been in volatile trade. We've been gradually eating away at the decline. So we're certainly not at the lows of the session.
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Chapter 6: What are the reasons behind Fisher & Paykel Healthcare's rise?
But as you point out, there's just one that is improving and that's the materials market. thanks to just a few companies there that are doing well. But the best performer on the ASX 200 today is actually Fisher & Paykel Healthcare, which is managing to lift in the order of 9.2%. And it has been the best improver over the entire session, basically.
This is a New Zealand-based company that sells things like humidifiers, oxygen masks, sleep apnea treatments as well, and it delivered growth in both revenue and profits. And across all of the regions that operate it's in. So as I said, it's a New Zealand-based company, but it actually makes most of its revenue in North America and then Europe, and then followed by Asia Pacific.
Chapter 7: How are ongoing tensions in the Middle East affecting Flight Centre?
So truly a global business.
It's been hard to ignore the worst performer today, which is market operator ASX Limited. It can be a bit confusing when there's news out of ASX because it's not the broader market, it's the actual company, ASX Limited.
And this morning, they warned investors to expect a material jump in costs over the next two years as it ramps up spending on technology, cybersecurity and regulatory remediation following the chess replacement fallout. Now, it's said ASX
Chapter 8: What should investors watch for in upcoming Aussie inflation data?
It expects an increase of up to 21% in total expenses in FY27, with capital expenditure also increasing. Now, management says the spending is necessary to address years of underinvestment compared to global peers, as identified by the Market Regulator Act. ASIC and to strengthen the resilience of Australia's market infrastructure.
And while it is paying out a dividend ratio that is unchanged, it did say it expects the payout to sit at the bottom end of that range for at least the next two dividends. So investors have been hitting the sell button today as it seems to keep investing more money into its business and its share price down 12.5%.
Yeah, ouch. And this is the share market operator. Of course, it's been through a lot recently. An interim CEO announced in April a board renewal in March and it fell when it handed down its results in February. Another underperformer today is Elders. It's down about 5.4%. There is a reason for the decline though. The agribusiness is trading ex-dividends. So this is for
its $0.18 per share dividend, which is payable on the 25th of June. It's in its fifth straight year of decline on the ASX as well. And last week, it did slump by 23% in one day when it handed down its half-year results. And this was because the results were not only a bit below what the market was anticipating, but it also warned of higher cost, not only higher diesel prices, but also
more expensive fertiliser due to the conflict in the Middle East, which, as we pointed out before, is an important part of the world when it comes to fertiliser transportation.
Shares of Flight Centre have also been losing ground today after investors noticed the lack of forward guidance in its latest trading update, because usually you'd expect some kind of comment on its outlook. However, it did flag that its early fourth quarter performance has been heavily impacted by Middle East tensions. which have continued through May.
So it's been primarily impacting its leisure business with an estimated profit impact of $10 million in April alone. That's largely due to refunds. It also highlighted that May and June are usually strong travel periods for leisure customers, but ongoing volatility has led to cancellations, refunds and reduced forward booking. So that could be an even bigger hit to profits.
So Flight Centre has been down 3% today. Keep in mind it already cautioned in its guidance back in February before the conflict began, quoting challenging global trading conditions. So its shares have plunged four months in a row and it's lost almost 40% of its share price since early February.
And Mineral Resources today was actually up quite strongly this morning. It's faded a bit. It's almost completely flat now, but it's decided to invest almost $500 million with its Chinese joint venture partner. Basically, it's the world's second largest lithium producer and processor rather.
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