ASX Large Caps: Xero slumps 13pc, NAB issues a warning, while China is back to deflation

ASX closed modestly higher as stocks were up across the board
Xero slumped 13pc, despite delivering strong half-year results
Optus CEO can’t explain in layman terms the root cause of yesterday’s outage

The ASX rose by 0.2% on Thursday, as stocks rose across the board.

Traders assessed overnight’s remarks by Fed Chair Jerome Powell, who offered few clues on monetary policy despite his colleagues saying that sticky inflation will see the Fed keep rates higher for longer.

A couple of releases by the ABS today also boosted market confidence.

First, the number of Aussie payroll jobs in mid-October was up slightly by 0.2% over the month, versus +0.1% the month before.

Separately, the ABS also said 10 of the 13 selected industries reported rises in business turnover in September. Sales turnover for the Information Media and Telecommunications industry was the highest, while Mining recorded the second largest rise.

On the ASX, the Tech sector suffered a 3% slump after a 13% drop for sector leader Xero (ASX:XRO) (more details below).

Lithium miners like Pilbara Minerals (ASX:PLS) and Lynas (ASX:LYC) advanced, along with market darling Neuren Pharma (ASX:NEU), which rose 3%.

Meanwhile, Optus CEO Kelly Bayer Rosmarin faces growing pressure to explain the root cause of the outage yesterday. Rosmarin said it was difficult to explain in layman terms what the cause was, as it was of such complexity that “there’s no soundbite that’s going to do it justice”.

Regionally, Asian shares mainly gained, but Chinese equities fluctuated following data showing the country could be sliding back into deflation.

China’s CPI dipped 0.2% in October compared with a year earlier, according to an official report released today.

BIG CAP WINNERS

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Code Name Price % Change Volume Market Cap NWH NRW Holdings Limited 0.03 3.43 807,073 $1,120,324,316 SQ2 Block 0.81 2.75 123,782 $2,664,379,794 S32 South32 Limited 0.03 2.73 10,194,185 $14,085,994,146 ORI Orica Limited 0.15 2.46 1,610,170 $6,859,702,863 VEA Viva Energy Group 0.03 2.42 4,538,766 $4,462,640,454 AUB AUB Group Ltd 0.28 2.41 147,067 $2,967,061,819 GNC GrainCorp Limited 0.07 2.35 335,310 $1,624,199,858 ORG Origin Energy 0.09 2.29 30,031,793 $15,056,814,645 GNE Genesis Energy Ltd 0.02 2.28 32,604 $2,353,462,215 VUK Virgin Money Uk PLC 0.03 2.27 885,565 $2,077,597,115 CSL CSL Limited 2.53 2.23 502,085 $119,727,619,850 ORA Orora Limited 0.03 2.22 2,381,375 $3,331,879,849 CQR Charter Hall Retail 0.03 2.19 592,557 $1,854,122,453 FBU Fletcher Building 0.04 2.17 236,824 $3,249,630,923 NHF NIB Holdings Limited 0.07 2.04 482,897 $3,448,050,496 NEU Neuren Pharmaceut. 0.13 1.98 725,857 $1,633,962,877

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Origin Energy (ASX:ORG) rose 1.5% after the influential proxy voting firm, CGI Glass Lewis, said it backed the near-$20 billion takeover proposal of Origin by a Brookfield-led consortium (as reported by the AFR).

Earlier, Origin’s largest shareholder, AustralianSuper, had knocked back the consortium’s best offer of $9.53 a share.

Investment management firm Challenger (ASX:CGF) was up 2% after announcing that it has expanded its strategic relationship with Apollo Global Management (NYSE:APO) to support its growth strategy.

Under the expanded relationship, Challenger and Apollo have formed an origination partnership and a representative from Apollo, Lisa Gray, will be appointed to the Challenger Board. Gray brings over 30 years’ experience across private and public sector businesses.

Commercial blasting systems company Orica (ASX:ORI) rose after declaring statutory NPAT for the full year FY23 of $295.7 million, versus pcp of $60.1m. This includes $73.3 million of significant items expenses after tax.

BIG CAP LOSERS

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Code Name Price % Change Volume Market Cap XRO Xero Ltd 98.94 -13.76 1,153,487 $17,376,415,728 HLS Healius 1.84 -6.94 1,578,222 $1,128,439,553 NEM Newmont Corporation 53.51 -4.29 1,319,383 $19,109,624,881 CEN Contact Energy Ltd 7.11 -4.05 606 $1,886,187,594 BOE Boss Energy Ltd 4.15 -3.94 2,002,623 $1,524,672,996 EMR Emerald Res NL 2.60 -3.89 1,298,290 $1,678,552,362 DHG Domain Holdings Aus 3.48 -3.74 661,614 $2,280,282,322 RED Red 5 Limited 0.32 -3.73 8,348,943 $1,159,833,399 RMD ResMed Inc. 23.03 -3.38 4,536,235 $13,494,745,509 JDO Judo Cap Holdings 0.90 -3.23 380,623 $1,031,649,775 STX Strike Energy Ltd 0.38 -3.16 2,035,581 $1,003,022,467 CRN Coronado Global Res 1.61 -3.01 1,605,104 $2,782,913,192 ZIM Zimplats Holding Ltd 20.40 -2.86 3,943 $2,260,390,629 CTT Cettire 2.84 -2.74 467,361 $1,113,215,602

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Xero (ASX:XRO) was the worst performing large cap today, down 13% despite delivering strong operating results for the half year.

Xero’s operating revenue was up 21% on pcp to $799.5 million, which supported a 90% increase in EBITDA to $206.1 million. Free cash flow increased to $106.7 million, representing a free cash flow margin of 13.3% compared to 2.4% in the pcp.

Xero’s net profit meanwhile increased to $54.1 million compared to a net loss of $16.1 million in H1 FY23.

National Australia Bank (ASX:NAB) fell -0.7% after it reported a $7.7bn increase (or +8.8%) in full-year cash earnings despite warning a more “challenging environment” is to come.

“Our message to people struggling with the increase in cost of living is: We’re here to help – please call us early,” said NAB’s CEO, Ross McEwan.

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