by Paul Sanger
The ASX closed near the day’s high, following a strong lead from Wall Street overnight. Lithium stocks were very much in focus again today posting strong gains across the sector.
Lake Resources (ASX:LKE) closed up 20.83 per cent, Core Lithium (ASX:CXO) closed up 4.84 per cent, Liontown Resources (ASX:LTR) closed up 4.65 per cent, Ioneer (ASX:INR) closed up 2.19 per cent, Sayona Mining (ASX:SYA) closed up 7.55 per cent, Pilbara Minerals (ASX:PLS) closed up 4.36 per cent, Vulcan Resources (ASX:VUL) closed up 8.89 per cent and European Metals (ASX:EMH) closed up 8.97 per cent.
At the closing bell, the S&P/ASX 200 was 1.12 per cent or 78.30 points higher at 7071.00.
The Dow Jones futures are pointing to a rise of 60 points.
The S&P 500 futures are pointing to a rise of 9 points.
The Nasdaq futures are pointing to a rise of 40 points.
The SPI futures are pointing to a rise of 87 points when the market next opens.
Asia-Pacific markets have climbed on Thursday after a better-than-expected inflation report in the US sent stocks spiralling higher. Hong Kong’s Hang Seng index has advanced 1.78 per cent, with the Hang Seng Tech index rising 2.71 per cent. Mainland China markets has also ticked up. The Shanghai Composite has gained 1.18 per cent and the Shenzhen Component has climbed 1.55 per cent. The Kospi in South Korea is 1.31 per cent higher and the Kosdaq has jumped 1.26 per cent. MSCI’s broadest index of Asia-Pacific shares outside of Japan has increased 1.39 per cent. Japan’s market is closed for Mountain Day today.
New Zealand house prices rebounded in June. The Real Estate Institute of New Zealand (REINZ) noted median house prices fell 4.7 per cent m/m in July to NZ$850K. On a yearly basis, prices dropped 1.8 per cent, the first such decline since July 2011. Auckland recorded a 4.3 per cent fall in its median home price over the month. Other figures showed property sales down 36.7 per cent y/y while the median number of days to sell was 47, up 16 on July 2021.
Australian office occupancy rates declined in July amid the Omicron wave, which saw people working from home. The Financial Review noted that office occupancy rates in the capital cities declined in July for the first time in six months. Melbourne’s occupancy rate fell to 38 per cent, down from 49 per cent a month earlier and the lowest in the nation, while Sydney’s rate fell from 55 per cent to 52 per cent.
Senex will spend $1b to expand its coal seam gas supply. The Financial Review noted that South Korean steel-maker Posco will partner with Gina Rinehart’s Hancock Energy for a $1b coal seam expansion. The project aims to boost annual production at the jointly owned Queensland Senex venture in the Surat Basin to 60 petajoules within two years.
Separately, Santos (ASX:STO) announced it has acquired Hunter Gas Pipeline, and aims to connect its Narrabri gas project to the East Coast market.
PBOC’s policy statement for Q2 said economic stability remains the top priority and reaffirmed its policy stance as “flexible and appropriate”, also repeating its aim to strengthen the implementation of prudent monetary policy and fully utilise the tool kit. Caution against flooding the system with excess liquidity was retained. It was noted that against the backdrop of slowing global growth, elevated inflation and geopolitical conflicts, the recovery foundation still needs to be consolidated. The possibility of rising structural inflationary pressure was also flagged. They added they will closely monitor inflation developments at home and abroad, while also watching developments in major developed economies and spillover effects from monetary policy adjustments, in the context of market mechanisms. There is nothing new on FX policy, and a commitment to deepen market-oriented reforms and enhance yuan flexibility was repeated.
Best and worst performers
The best-performing sector was Consumer Discretionary, up 2.17 per cent. The worst-performing sector was Utilities, down 1.49 per cent.
The best-performing stock in the S&P/ASX 200 was Lake Resources (ASX:LKE), closing 20.83 per cent higher at $1.59. It was followed by shares in Life360 (ASX:360) and City Chic Collective (ASX:CCX).
The worst-performing stock in the S&P/ASX 200 was Computershare (ASX:CPU), closing 5.12 per cent lower at $22.97. It was followed by shares in Rio Tinto (ASX:RIO) and APA Group (ASX:APA).
Company news
Chrysos Corporation (ASX:C79) today announced it has signed ten new PhotonAssay lease agreements with existing customer Britannia Mining Solutions. This brings the total number of deployed, contractually-committed units to 48, up from the previous total of 38 units. The combined initial five-year terms of the ten new BMS lease agreements increased Chrysos’ Total Contract Value by $149m to $705m. Shares in C79 closed up 1.34 per cent at $3.77.
Empire Energy (ASX:EEG) today provided shareholders with an update regarding the ongoing flow testing of the Carpentaria well in Empire’s 100 per cent owned and operated tenement, located in the Northern Territory’s Beetaloo Sub-basin. Empire MD Alex Underwood commented, “This is an outstanding result for Empire and our shareholders, and a historic moment in the advancement of the Beetaloo Basin. To our knowledge, this is the highest sustained gas flow rate of any well drilled in the Beetaloo Basin to date.” Shares in EEG closed up 18.75 per cent at 28.5 cents.
Red River Resources (ASX:RVR) is pleased to announce results from five holes drilled at its Hillgrove Gold Mine in New South Wales, returning encouraging high-grade gold intercepts within broader mineralised zones at the Eleanora-Garibaldi deposit. Red River’s Board is currently completing a strategic review of Hillgrove before re-commencing mining. Shares in RVR are closed up 5.84 per cent at 14.5 cents.
TMK Energy (ASX:TMK) today announced that it has signed a Binding Memorandum of Understanding with a wholly owned subsidiary of PetroChina. The signing ceremony was held at TMK’s offices after a period of due diligence during which PetroChina representatives reviewed the existing data and recommended that they proceed to sign an MOU to formalise the growing relationship. Shares in TMK closed up 10 per cent at 1.1 cents.
AMP (ASX:AMP) has flagged a large capital return as the result of a strong capital position due to asset sales, and an improved net interest margin, while announcing a sharp fall in 1H net profit as NIM fell due to competitive mortgage pricing and a higher cost to income ratio. 1H NPAT has fallen 45 per cent on-year to $46m as NIM has fallen 39bp to 1.32 per cent. 1H underlying NPAT has fallen 15 per cent to $117m. AMP won’t pay an interim dividend, but will start a $350m share buyback immediately. It also plans a further $750m in capital returns, including a combination of special dividend or further on-market share buyback. The total capital return of $1.1bn planned through FY23 equates to a massive 29 per cent of AMP’s current market capitalisation of $3.8bn and should boost the share price. Shares in AMP closed down 0.86 per cent at $1.155.
Telstra (ASX:TLS) has lifted its dividend for the first time in seven years, raising its ordinary payout from 10c to 13.5 cents per share and returning $1.9bn to shareholders despite posting a drop in profits, total income and earnings per share. In its full-year results — the last under outgoing chief executive Andy Penn — the telco giant posted a net profit after tax of $1.8bn, down 4.6 per cent year-on-year, while total income was down 4.7 per cent, EBITDA down 5 per cent and earnings per share of 14.4 cents down 7.7 per cent. Despite the widespread hit to its numbers, the company will pay a fully-franked dividend of 8.5 cents per share on 22 September, bringing the total final dividend to 16.5 cents per share. “This represents the first increase in the total Telstra dividend since 2015 and recognises the confidence of the board following the success of our T22 strategy, the ambition in our T25 strategy of high-teens EPS growth from FY21 – FY25, the strength of our balance sheet and the recognition by the board of the importance of the dividend to shareholders,” CEO Andy Penn said. Shares in TLS closed down 1.25 per cent at $3.96.
QBE’s (ASX:QBE) headline 1H22 NPAT of $151m and interim dividend of 9 cents a share has beaten “heavily revised-down consensus” estimates of $123m and 7 cents respectively, says UBS analyst Scott Russell, who reiterates his Buy rating and $16.00 target on the insurer. An adverse reserve movement of $68m “appears to run contrary to majority of global peers”, while QBE’s adjusted combined operating ratio of 92.9 per cent “looks pedestrian” (0.4 percentage points on the prior corresponding period) “considering multi-year premium rate increases.” But though FY22 gross written premium guidance has lifted slightly to “around 10 per cent” from “high single digit”, it “appears conservative” and investment yields continue to track higher, annualising 2.8 per cent versus 2 per cent in 1Q22. “Going into the result we had reservations about this result given widespread headwinds and weak headline profits,” Mr Russell says. Shares closed up 3.29 per cent at $12.54.
Commodities and the dollar
Gold is trading at US$1787.30 an ounce.
Iron ore is 0.4 per cent lower at US$108.40 a tonne.
Iron ore futures are pointing to a rise of 2.27 per cent.
Light crude is trading $0.20 higher at US$89.88 a barrel.
One Australian dollar is buying 70.90 US cents.
