Latest / ausbiz a.m / 13.10.26 Jack Stickley, Morgans
Transcript
- Andrew: Good morning. Welcome to your morning wrap from Ozbiz. It is Tuesday, October the 13th, and the local market expected to open marginally higher this morning. ASX futures pointing up eight points. In a moment, we'll preview the day ahead with Jack Stickley. First, though, a look at global markets. The surge in crude oil prices and positioning ahead of US earnings season triggered a rotation from tech into value sectors. The Dow was up 0.4%, near an all-time high. The tech heavyways did drag the NASDAQ. Lower at three-tenths of percent, the S P five hundred slipping around one-tenth of percent. And the broader US bond market was closed for the Columbus Day holiday. Geopolitics did dominate the session after drone and missile strikes on Riyadh's International Airport and fresh energy infrastructure hits in Ukraine sent brood Brent crude futures soaring. those Brent crude there at hitting $107 a barrel, so more than two percent. Gold east to around four thousand one hundred and seventy an ounce, Bitcoin falling below eighty three thousand US, and the Aussie is currently trading around sixty nine point six US cents. Well let's get across those market moves and what to look forward to. Jack Stickley joining us from Morgans. Jack, good morning. Jack Stickley: Morning, Andrew. Andrew: So yeah, geopolitics obviously, those oil prices on the move again, that's obviously a concern. Jack Stickley: Certainly. That's starting to to unwind slightly. But the real focus is on those energy prices, which is having an impact on inflation and bond yields, which is really impacting those those gross sectors and interest rate sectors such as your real estate investment trust here in Australia. Andrew: All right. Well look, we'll get to Australia in just a moment. Let's just stay in the States and th earnings season about to begin with the banks Jack Stickley: Yes. Andrew: as they normally lead off. What what are the expectations there? Jack Stickley: strong. Corporate activity in America has been strong. We had the SpaceX float happen over the last twelve months. you they've got exposure to the AI supply chain companies. So there's a lot of capital flowing into those particular sectors at the moment. You've got the S P five hundred and Nasdaq nearing all-time highs. So I do expect those bank results to be to be positive. And it's something that we're really looking for. The healthy consumer over in the US seem to be holding up. Fairly reasonably well. And then you got the chip supply makers, the TSMCs of the world and ASMLs. As I said, they've really been the sector that's driven markets high over the last twelve months. So really interested to see what what backlogs they have and and what read throughs to that broader AI supply chain trade that they're able to highlight in their results. Andrew: I gather your senior analyst has just returned from the City's Global Tech Conference in New York. What what are some of the the themes they came across? Jack Stickley: Yeah, it was a great trip. You saw lots of different companies over there. one of the key themes was just the the focus that they're that they've got on cybersecurity. You've got all of these businesses trying to implement AI into their workflows. And and one thing that's become abundantly obvious is just how important cybersecurity is to all of this. And so they met with CrowdStrike and and that's a business that has done really well of late. This idea that there's this SaaS pocalypse and all these software companies are no longer to be needed in the future. Look, there's certainly going to be changes to their business model moving forward. And there are going to be particular software companies that are displaced in all of this. But if you but but at the same time, there's also going to be a heck of a lot of winners. So he was fortunate enough to meet with Microsoft, and that was a meeting that that he got a lot out of and a great deal of comfort. But also this AI build out. is is in its first innings is is the feedback that I received from our analysts talking to all of these companies that use these computer chips. they can't get enough of them. So strong backlogs and they were some of the key themes. Andrew: Well Jack, let's turn to the local market. What what are the key themes you're watching here? Jack Stickley: Well, you know, in AGM season, so we're gonna have all the retailers, all the banks, or Commonwealth Bank, for example, they've got their AGM today. So that's gonna be a really good breathe through for the consumer. The theme that's dominating market headlines at the moment is inflation, interest rate, and what impact that's gonna have on the consumers. So we've got names like Beacon, they've got their AGM today. CBA at their FY26 results. We did see a softening in those investment loans. So you've got the the budget, what impact that's gonna have on. investors, the wealth effect, the property market more broadly. So yeah, there's plenty of read through theirs, but the one thing they're really focusing on is that is that health of the consumer this AGM season. Andrew: So what do you what do you what's your view on the banks at the moment? Obviously with CBA's A GM we'll get some further clues, but obviously the focus very much on the property market and how that's affecting their mortgage businesses. Jack Stickley: look, anecdotally, I'm talking to a lot of people in the property sector, whether that be mortgage brokers, real estate agents, investors. And look, this budget has certainly changed the goalpost for them. They're having to rethink that investment strategy. investor loans clearly are going to be impacted by the removal of negative gearing. we have seen lower clearance rates. we have seen A four, albeit from a quite a very high peak in Australian house prices. Aussies are obsessed with properties. The banks are the ones who loan that money out to their customers in order to be able to purchase property. If we were to see a slowdown in that particular segment of the market, you know, you got you have to think that the banks are going to be impacted by that. And at the same time, you could argue for the last couple of years now, they have been trading it. at fairly lofty valuations just because of how strong that property market here in Australia has been. It'll be interesting to see how it plays out, but just sitting on the sidelines in this one, Andrew, and and and just just seeing those catalysts such as the CBA AGM today and really looking forward to it. Andrew: Jack, resources. Obviously underlying commodities have been pushing that sector higher. we've seen, you know, particularly BHP off the copper play. Interestingly, we've got Glencore coming to the market. what do you make of that listing? Jack Stickley: Very interesting, Andrew. It will be listed on the Australian Stock Exchange as of tomorrow under the ticket code GLC. Look, this is a global miner with a with an enormous footprint. I think it's really well suited to the Australian share market with the likes of BHP, Rio, and Fortescue. It because it's been listed on the London Stock Exchange, it does trade at at a at a discount compared to the likes of a BHP. It's got a it's got it's got a marketing business which is which is quite fascinating. The way I think about it is like the the FedEx for commodities. If there's a part of the world who that is that is short on a particular commodity, Glencore are the ones to be able to get it there to you in a in a quick and efficient manner. With all the volatility that's happening with resources, we took we've got the Ukraine and and what's happening in the Middle East, that particular division is on fire. on top of that, you've got Really good coal, met coal assets. you've got copper assets, you've got a strong balance sheet and a and and a nice dividend yield. So I I think it's gonna be a popular one, Andrew, and and I can't wait to see it listed here. Andrew: I gather that they're forecasting copper will account for fifty percent of its earnings by twenty thirty. given now its presence locally, do you feel as though that's gonna draw perhaps capital away from B H P? Jack Stickley: Only time will tell Andrew. I mean, BHP is a phenomenal business and and it's it's really been the shining light of the Australian share market for for for for quite some time now. y I mean, yeah, p t potentially. It's another big miner and and BHP has got that copper focus. Glencore's got that copper focus, but my goodness, you can never you can never knock a champion. BHP has just been the absolute shining light on our exchange. So yeah, look, potentially. But my God, the second you write off a company like BHP, it always tends to surprise on the upside. So yeah, we'll have to wait and see. Andrew: Yeah, I don't think we're writing BHP off any time soon, Jack. Jack, now I gather you guys are Morgan's, you're holding a conference this week. what what's likely to be discussed, do you think, and and what are some of the other stocks on your list? Jack Stickley: It's it's a great conference. unfortunately I'm not able to go this year, Andrew, because I'm expecting my second and I'm I'm quite disappointed. But with all the Yes. Andrew: wow, well, congratulations to you. Jack Stickley: thank you very much. But with all the with all the macro noise, you saw you you you heard it on the start of your show with bond yields and interest rates and health of the consumer, it's it is easy to get weighed down by the macroeconomic headlines. What I enjoy about these conferences is that we're hearing directly from CEOs what they're seeing. On the front line in their businesses. And so there's two companies that I'm really looking forward to seeing. One is the Gem Life. It's a vertically integrated property developer. It's run by, it's run, it's got a really good management. Adrian Pullich, his father started the business a while ago now, but they're they're less impacted by the rise in building costs because they're vertically integrated. They they make all their own retirement living. V villagers over fifties living. And so they've got a lot of functions in house. obviously you've got that leverage to the property market there. But yeah, really well run business with a strong pipeline of growth. And then Eagles Automotive again, it it sells close to twenty percent of all the new cars here in Australia. So so naturally you're gonna have questions about whether they're seeing a slowdown in the consumer, given i if there were one, new cars would be would be would would be on the on the downward trend. And so yeah, really looking forward to seeing what Keith Thornton, the CEO of that business, has to say. I mean, they've been listed since 1956. There isn't a cycle they haven't seen, but they have diversified their business quite well with property. They've got an exclusive partnership with BYD and electric vehicle market has been really strong lately. Plus they've got an acquisition that they're that they've got in Canada. So it's a great read through for the consumer and one I can't wait to can't wait to hear about. Andrew: Jake, you're you're sounding fairly optimistic about the local market. Is that an accurate reflection of how you're looking at at the view towards the end of the year? Jack Stickley: it it's it's it's very easy to get bogged down in the negative headlines. one thing that is unique to the Australian market, I would say, is is that we we don't have much in the way of the AI trade, which has really just catapulted the US market and and global markets. And so it's we we've yeah, that that's that's one thing that that we're clearly missing here. is and our tech sector has it's down 35% over the last 12 months. And so that's clearly a reflection of not having those type of businesses here. but there's there's certainly pockets of opportunity. I mentioned the tech sector's down 35%. You've got consumer-facing stocks like eagers that that have been that that are that are trading at lows. You've got those interest rate sensitive stocks like your real estate investment trust, which have had a really tough time of it over the last 12 months, and healthcare. So I certainly think there's opportunities out there in those beaten up sectors, Andrew, particularly for that patient capital that's willing to ride out the the inevitable cycles that that that come and go. Andrew: Jack, terrific to get your view from Morgans. And all the best to you and your partner in what is a very big week for you. Hope all goes well. Thanks for joining us. Jack Stickley: Th thanks very much, Andrew. Much appreciated. Andrew: And that is your Osbiz morning wrap. Hope you have a great day. I'm Andrew Gagan. Thanks for listening.