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ASX 200 morning report – PDL, ALX & RIO shares in focus

The local sharemarket followed global markets lower on Tuesday, with the S&P/ASX 200 (ASX: XJO) opening as much as 2.5% lower.

The day’s trade was a story of the weight of numbers, with every sector barring communication finishing lower, but more companies gaining than falling.

The size and scale of weakness in energy and commodities, down 2.1% and 2.4%, respectively, was enough to drag the ASX 200 down 1% on the day.

Investors are dealing with a flurry of concerns ranging from energy crisis to Chinese lockdowns and higher interest rates.

Insurance broker AUB Group Ltd (ASX: AUB) was the biggest laggard, falling 10.6% after completing a $350 million capital raising to fund the purchase of UK group Tysers.

Ampol Ltd (ASX: ALD) outperformed, falling just 0.7% after the company confirmed the acquisition of NZ-based Z Energy was now complete.

Shares in everything commodity related were hit, even gold and lithium, but Rio Tinto Limited (ASX: RIO) was among the worst, falling 3.6%.

The focus on China has seen the AUD fall to a multi-year low, hitting 69 cents against the USD in Tuesday’s session, which will likely provide somewhat of a buffer against falling overseas markets as it has in past corrections.

Atlas to restructure

Toll road operator Atlas Arteria Group (ASX: ALX) announced it will need to restructure the struggling Washington-based toll road which has cost shareholders some $300 million in write-downs in the last few years.

Weak traffic growth, which is just 64% of pre-COVID levels, means the successful European roads continue to subsidise the struggling motorway; shares were down 0.6%.

Pendal’s surprise

The standout was fund manager Pendal Group Ltd (ASX: PDL) which reported an unexpected 7.5% increase in profit in the first half, boosted by the successful acquisition of US fund manager Thompson, Siegel and Walmsley.

Profit hit $96.7 million on the back of a 30% jump in fee revenue to $326.6 million as the company stands out among the other struggling ASX-listed fund managers.

The result was a significant jump in the dividend of more than 40% to 17 cents per share. Pendal shares finished the day 8% higher.

The key driver of operational performance was the value investing focus of both Pendal and its recent acquisitions, which are seeing strong returns amid a selloff in growth and technology stocks.

Retail sales hit record levels

Australian retail sales beat expectations in April, hitting a record of $93 billion, 4.9% higher than this time last year and 1.2% higher than the previous month. However, this trend may turn following the RBA’s rate hike.

ASX 200 today

Looking ahead, the ASX 200 is expected to open slightly lower this morning, following a mixed lead from US markets overnight. To find out more, check out my US stock market report.

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