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ASX 200 morning report – RHC, ALL & WEB shares in focus

The local market couldn’t overcome growing concerns about stagflation, an instance when the economy slows as inflation increases, with the S&P/ASX 200 (ASX: XJO) falling 1.7% on Thursday.

The losses were broad-based, with every sector but healthcare falling, led by the consumer sectors. Healthcare gained 0.1% with the discretionary and staples companies down 3.1% and 3.7% after Target (NYSE: TGT) delivered an underwhelming quarterly update.

Energy and materials also fell more than 1% with less than 10% of the market finishing higher.

Wesfarmers Ltd (ASX: WES), Woolworths Group Ltd (ASX: WOW) and JB Hi-Fi Limited (ASX: JBH) fell by 7.8%, 5.6% and 6.6%, however, such broad-based losses likely ignore the very unique conditions in different parts of the world.

Economic news remained strong with a 40-year record low in unemployment of 3.9% despite only 4,000 more jobs being created in April.

On the positive side, the long-awaited $60 billion merger of BHP Group Ltd’s (ASX: BHP) oil business with Woodside Petroleum Limited (ASX: WPL) received 97% of votes in favour and is set to proceed in becoming a top 10 global oil producer.

KKR confirms Ramsay bid

Healthcare companies attracted the majority of capital flows, with both CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC) finishing higher on a rough day for global sharemarkets.

Ramsay was buoyed by confirmation that private equity giant KKR would be proceeding with their $88 per share, $20 billion bid for the company. Ramsay shares still trade at a 10% discount to the offer price.

Aristocrat delivers record profit

Gaming machine designer and distributor Aristocrat Leisure Limited (ASX: ALL) gained 6.7% after reporting a 46% jump in half-year profit, reaching a record of $530 million as gamblers flocked online amid the pandemic.

Revenue was 23% higher with the group clearly not suffering from supply chain or labour issues. The result was a $500 million on-market share buyback.

Webjet returns to profit

“Travel is back, baby” said the CEO of Webjet Limited (ASX: WEB) after the company reported a return to profit in the second half of FY22.

Costs are falling and revenue is returning amid surging travel and airfare prices. Revenue more than tripled in the 12 month period whilst the loss narrowed from $100 million to just $15 million.

ASX 200 today

Looking ahead, the ASX 200 is expected to open broadly flat when the market opens this morning, following a slightly negative lead from US stock markets overnight.

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Disclosure: At the time of publishing, Drew owns shares in CSL.