ASX 200 Live Updates for Thursday, 22nd May

Live ASX Coverage – Thursday, 22nd May

Welcome to our live coverage of the Australian Securities Exchange (ASX) for today, where we aim to provide you with timely updates. Please refresh your page for the latest information, and feel free to give us your feedback to help us improve.

Wesfarmers Adjusts Lithium Production Projections

[9:00 am] Wesfarmers has unveiled new insights during their strategy day presentation, which has been classified as non-market sensitive. The key highlights include an adjustment in lithium production guidance:

• The company’s share of lithium production for WesCEF is now expected to be between 140-150,000 tonnes, revised down from a previous estimate of 150-170,000 tonnes.
• Given the current low market prices, losses for WesCEF’s lithium sector in FY25 are anticipated to increase to approximately $60 million, compared to the earlier forecast of $48 million.
• The Covalent lithium project is progressing well, with commissioning currently at 88% completion and initial production set to commence in mid-2025.

Source: ASX Announcement | Company page: Wesfarmers (WES)

Featured Stories from Livewire

1. Emerging Software Stock
   Forget Pro Medicus: This software stock is emerging as a future fundie favourite – Energy One, a lesser-known energy trading software provider, has reported a significant price increase of 218% over the past year. This growth has garnered attention from small-cap investors, including Seneca and Wilson Asset Management, thanks to its dominant market position and consistent revenue growth of 18%. Analysts predict a potential share price of $20 and possible inclusion in major stock indices, although investors should be mindful of the inherent risks associated with small-cap stocks.

2. Hedged ETFs for Currency Protection
   12 hedged ETFs to weather a shock rise in the Aussie dollar – The 2000s were termed a "lost decade" for Australian investors in the S&P 500, where a -0.95% return in USD converted to a -4% loss in AUD due to the appreciation of the Australian dollar. Currency hedging can be an effective strategy to manage this risk, and products like Vanguard’s VGS/VGAD and iShares’ IVV/IHVV offer accessible solutions. However, it is noteworthy that the increase in US interest rates has been reducing returns from hedged ETFs by approximately 1% per annum.

3. Challenges in the Property Sector
   Boots on the ground of the Aussie property crisis – Australia’s property sector is grappling with significant challenges, such as soaring costs, labour shortages, and long approval processes, which are hindering builders, developers, and home buyers. Despite these difficulties, opportunities remain, particularly in New South Wales’ land and townhouse market, Melbourne’s undervalued properties, and the expanding role of private credit, which provides developers with increased flexibility and higher loan-to-value ratios.

Market Overview

[8:45 am] US stock markets closed significantly lower, primarily influenced by rising bond yields:

• A disappointing performance in the recent US 20-year Treasury note auction pushed the 20-year yield to 5.11%, a peak not seen since October 2023.
• The 30-year Treasury yield rose by 12 basis points to reach 5.08%, marking the highest level since last October and the second instance since 2007 of surpassing the critical 5% benchmark.
• Concerns regarding fiscal deficits linked to the progress of the GOP reconciliation bill appeared to have more impact than any potential benefits from fiscal stimulus.
• Retail earnings showed mixed outcomes; notably, Target fell short of its quarterly earnings expectations and revised its full-year forecast downwards.
• Geopolitical tensions are on the rise, particularly with reports indicating Israel may be planning a strike on Iran’s nuclear facilities.

Morning Update

[8:40 am] Futures for the S&P/ASX 200 indicate a sharp decline, down 82 points (-0.98%), which aligns with the rise in global bond yields.

For those new to our updates, please check our earlier posts for the Morning Wrap to catch up swiftly.

This summary provides an overview of the key happenings on the ASX and related financial markets. Be sure to stay informed as events unfold!