BHP too late to the OZ Minerals party: JPM

BHP’s dividend watched by investors as earnings season ramps up

“After receiving $US8 billion in franking with the Woodside/BHP Petroleum de-merger in June this year, this has been a good year for shareholders already.”

Mr Ryan said BHP’s pivot towards growth and investment, highlighted by its $8.4 billion bid for OZ Minerals, marked a new era of lower payouts and new mines. It means this week’s result would likely represent a peak annual distribution to shareholders.

“The $8.4 billion OZ Minerals bid pales in significance to the size of BHP dividend in the past few years, but shows the tremendous future growth opportunities this pivot strategy could unlock,” Mr Ryan said.

The warning followed a disappointing payout by fellow mining behemoth Rio Tinto, which more than halved its interim dividend despite posting a better than expected $US8.6 billion underlying half-year profit.

Santos, CSL, JB Hi-Fi and Transurban are among the other large cap results that will be closely followed this week.

Early signs ‘reassuring’

Around 30 blue-chip companies have reported results so far, with half of those surprising to the upside, according to AMP. While 63 per cent have posted earnings that are higher than a year ago, just 47 per cent have increased their dividends.

UBS equity strategist Richard Schellbach noted that the banks provided the best barometer on the market’s overall health.

“Their results [have been] on positive balance, and point towards an economy which will decelerate, but avoid recession,” he said.

Mr Schellbach added that while rising input costs were the biggest issue facing corporate Australia, businesses were managing those pressures well.

Last week, Computershare cautioned that costs were expected to rise in the 2023 financial year, while News Corp sounded a similar warning.

“We expect cost impacts from continued supply chain and inflationary pressures together with wage inflation challenges to continue,” said Susan Panuccio, News Corp’s chief financial officer.

Mr Schellbach said the relief rally in the local market, sparked by investors pricing in a soft economic landing, looked to have “run ahead of itself”.

“Equities have a decelerating economy and earnings downgrade cycle to contend with, and therefore the scope for any further gains driven by dovish rate assumption would seem limited,” he said.

Wall Street’s rebound has shown little sign of slowing though, with the S&P 500 notching its fourth-straight weeks of gains, its longest winning run since November. Big tech led the market on Friday, with the Nasdaq adding 2.1 per cent.

local data

The release of Australia’s wage price index on Wednesday is expected to show growth of 0.8 per cent in the June quarter, lifting annual wages growth to 2.7 per cent.

ANZ said that a higher quarterly print of 0.9 per cent or more would be a “pleasant surprise” and signaled that wages were responding to tight labor market conditions.

Employment data for July will be released on Thursday, which is projected to show that 25,000 jobs were added in the month while the jobless rate remained steady at a near 50-year low of 3.5 per cent.

Across the ditch, The Reserve Bank of New Zealand is widely expected to deliver a fourth-consecutive half a percentage point rate rise on Wednesday, lifting the cash rate to 3 per cent.

However, with inflation data coming in hotter than the RBNZ had forecast in May, ANZ cautioned that markets should not rule out a three-quarter of a percentage point increase.

Chinese data to be released on Monday is anticipated to show activity in the world’s second-largest economy continued to recover in July following the re-opening from COVID-19 lockdowns.

Industrial production is predicted to increase 4.5 per cent year-on-year, with retail sales growing at an annual rate of 5 per cent.