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ASX Market Update – June 19
Welcome to our live coverage of the Australian Securities Exchange (ASX) for Friday, June 19. We’ll provide frequent updates before market opening and throughout the day, with the blog concluding around 2:00 PM AEST. Your feedback is invaluable to us—let us know how we can improve.
BHP Increases Jansen Stage 2 Cost to $6.9 Billion
[9:07 AM] BHP Group has increased its total investment in the Jansen Stage 2 potash project to US$6.9 billion, marking a 41% rise from the initial approval of US$4.9 billion in October 2023. The company is also anticipating a ~US$2.3 billion impairment charge. Key updates on the project include:
- The internal rate of return (IRR) has been revised down to 11% from the previously projected 15-18%.
- Payback period has extended from approximately 6 years to 8 years.
- First production is now expected in late FY31, with the project currently 16% complete.
- Stage 2 is projected to deliver around 4.36 million tonnes per annum (Mtpa), ultimately combining for 8.5 Mtpa after ramp-up.
- Underlying EBITDA margins remain robust at over 65%.
- FY27 group capital expenditure is guided to remain at around US$11 billion.
- Following the announcement, BHP’s NYSE shares fell by 2.7%.
The Jansen Potash project has faced challenges, notably a prior investment adjustment earlier this year, which also impacted share prices.
Goldman Sachs on Hormuz Oil Flow Recovery
[8:58 AM] Goldman Sachs predicts that oil flows through the Strait of Hormuz may return to 70% of their pre-war levels as producers shift to alternative routes. Relevant points include:
- Achieving pre-war volumes would require a 13 million barrels per day increase in flows.
- Currently, 7.5 million barrels per day are bypassing Hormuz through other routes.
- The UAE aims to eliminate dependency on Hormuz and expand ports on the Gulf of Oman coast.
- Shipping availability isn’t expected to hinder recovery, with ample empty tanker capacity.
Intel Soars After Trump’s Apple Chip Announcement
[8:57 AM] Intel shares surged 10%, reaching new highs after President Trump announced a partnership with Apple for semiconductor production in the U.S.
- This collaboration is seen as a pivotal move for Intel’s foundry business, which has struggled previously to attract external partners.
Apple to Increase Product Prices Amid Chip Shortages
[8:56 AM] Apple plans to raise product prices due to escalating costs of memory and storage chips, with CEO Tim Cook stating the situation has become unsustainable.
- High demand for AI-related data centre components is inflating costs.
- Specific details on which products will see price hikes were not disclosed.
Accenture Shares Plunge Due to Weak Guidance
[8:53 AM] Accenture’s share price plummeted by 18%, following disappointing bookings and revenue forecasts.
- Q3 revenue increased by 6% to $18.7 billion, aligning with expectations.
- However, bookings dipped 2% to $19.3 billion, raising fears that AI advancements could be disrupting consulting demand.
- The company has also revised down its revenue growth guidance for the upcoming fiscal year.
JPMorgan Warns of Chip Market Volatility
[8:52 AM] JPMorgan has issued a warning about the volatility in semiconductor stocks, which could result in forced selling by investors.
- Recent rallies in chip stocks have been accompanied by increased volatility, raising concerns about potential market corrections.
- Valuations in semiconductor stocks are noted to be stretched, increasing the likelihood of market adjustments.
Trump and Iran Reach Initial Agreement to End War
[8:51 AM] A memorandum signed by Trump and Iranian President Masoud Pezeshkian aims to end the longstanding US-Israeli conflict with Iran.
- The agreement includes ceasing military operations and ending sanctions.
- The Strait of Hormuz is set to reopen under specific conditions benefiting commercial vessels.
Fed Signals Rate Hikes Amid Inflation Concerns
[8:50 AM] Following Kevin Warsh’s first press conference as Fed chair, traders have begun to anticipate potential rate hikes.
- Recent data showed stable treasury yields and indications that several Fed members expect rates to rise by year-end.
- Rising inflation is attributed to robust job growth and ongoing investment in AI technologies.
Market Summary and Outlook
[8:45 AM]
- Bullish Indicators: Decreasing oil prices, strong AI demand, and resilient consumer retail sales.
- Bearish Indicators: A hawkish Fed stance on inflation, rising competition in AI, and trade uncertainty.
US Market Recap: Major indices finished higher, boosted by the resurgence in tech stocks related to AI demand. However, the overall market breadth was weak, with caution stemming from potential economic headwinds.
ASX 200 futures are currently down 51 points (-0.57%). The US market will be closed tonight in observance of the Juneteenth National Independence Day.
This summary encapsulates the latest developments affecting the ASX, highlighting significant market movements and corporate announcements.
