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Key points:
Jennings sees oil-driven inflation and rising yields pressuring risk assetsBrambles (ASX:BXB), Elders (ASX:ELD) and Tuas (ASX:TUA) singled out as major dragsElders’ leverage and Brambles’ pallet upgrade costs highlighted as key concerns
Henry Jennings from Marcus Today outlines a cautious view of global markets, arguing that rising geopolitical tensions and surging oil prices are driving a flight to safety, lifting bond yields and the US dollar while pressuring the Australian dollar and commodities. Jennings suggests this backdrop is weighing heavily on the ASX, with investors showing little appetite to “buy the dip” as risk sentiment deteriorates.
Jennings highlights specific pain points on the local market, with Brambles (ASX:BXB), Elders (ASX:ELD) and Tuas (ASX:TUA) all sharply weaker. He characterises Elders’ recent acquisition activity and asset sales as creating “messy” numbers, compounded by net debt of around $622 million and leverage of 3.8 times, well above its target range. Brambles, in Jennings’ view, faces margin pressure as warehouse automation demands higher-quality pallets, although he notes the reinstated buyback as a sign of management confidence.
On the macro front, Jennings points to rising Japanese and UK bond yields and growing concerns around US 30-year yields and mortgage rates, which he sees as constraining any scope for the new Federal Reserve chair to cut rates. He also flags risks of double-digit inflation in Europe if oil prices spike further, warning that unresolved tensions in the Gulf of Hormuz could exacerbate the situation.
