by Paul Sanger
At noon, the S&P/ASX 200 is 0.07 per cent or 5.30 points higher at 7118.10.
Coal mining stocks on the move again today. Terracom (ASX:TER) up 6.15 per cent, Whitehaven Coal ( ASX:WHC) up 5.92 per cent, YanCoal ( ASX:YAL) up 4.48 per cent, Stanmore Resources (ASX:SMR) up 2.58 per cent, BHP (ASX:BHP) up 1.19 per cent.
The SPI futures are pointing to a rise of 11 points.
Best and worst performers
The best-performing sector is Energy, up 4.14 per cent. The worst-performing sector is Real Estate Investment Trusts, down 1.54 per cent.
The best-performing stock in the S&P/ASX 200 is Santos (ASX:STO), trading 5.94 per cent higher at $7.49. It is followed by shares in Whitehaven Coal (ASX:WHC) and Coronado Global Res (ASX:CRN).
The worst-performing stock in the S&P/ASX 200 is TPG Telecom (ASX:TPG), trading 10.73 per cent lower at $5.91. It is followed by shares in Inghams Group (ASX:ING) and PointsBet Holdings (ASX:PBH).
Asia-Pacific markets
Asia-Pacific markets were mostly upbeat on Friday against a mostly muted Wall Street looking to revive its recent market rally.
Japan’s Nikkei 225 increased 0.51 per cent while the Topix index added 0.45 per cent whereas the Kospi was slight down at 0.38 per cent. Japan’s July headline inflation has risen to 2.6 per cent from 2.4 per cent in June. That was above expectations of 2.2 per cent and higher than the Bank of Japan’s goal of 2.0 per cent.
New Zealand posted slightly higher exports in July at $6.68 billion New Zealand dollars ($4.17 billion) from NZ$6.27 billion. But imports also rose to NZ$7.77 billion for July from NZ$7.38 billion in June.
Malaysia will release its trade figures for July later in the day.
After Tencent’s second quarter revenue slide earlier this week, fellow tech giant NetEase offered the markets a sweetener posting a nearly 13 per cent year-on-year increase in its second quarter net revenue, beating expectations.
There were revisions galore for China’s GDP growth in the past day. Goldman Sachs and Nomura downgraded their forecasts citing weaker demand, uncertainties stemming from zero-Covid policy and an energy crunch.
Hong Kong stock index revamp could drag into 2023 as unprofitably companies fail to make the grade (Bloomberg)
Russia jumps to third in list of countries using yuan for global payments (Reuters)
Economy:
Japan’s inflation stays above BOJ target for fourth month in a row (Reuters)
Sri Lanka to ask Tokyo to open talks over debt restructuring with country’s main creditors (Reuters)
South Korea to preemptively deal with foreign debt and capital outflow concerns (Yonhap)
Central Banks:
RBI now solely concentrated on cooling prices as inflation stays above target (Bloomberg)
Geopolitics:
Presidents Xi and Putin to attend G20 summit in Indonesia (Bloomberg)
Australia a beneficiary of Biden’s new EV battery program signed into law this week (TheAustralian)
North Korea leader’s sister calls South’s offer of aid-for-nukes “audacious”, rejects proposal (Yonhap)
Canadian lawmakers next to visit Taiwan (Reuters)
Commodities:
Indonesia could impose a nickel export tax before year end (Bloomberg)
Semiconductors:
China faces ‘impossible’ challenge in developing domestic chip industry as US tightens trade laws (SCMP)
Taiwan has not been informed of “Chip 4” meeting between major semi producers (Reuters)
ESG:
Yangtze tributary runs dry as China faces another month of drought (Reuters)
India Considers Delaying Coal Plant Closures Amid the Global Energy Shortage
The government of India is considering a slower withdrawal of its ageing coal-fired power plants while also adding new coal fired plants, a move that would keep fossil fuel capacity higher for years and will impact efforts to achieve net zero goals.
China seen lowering LPRs Monday:
Bloomberg poll of 16 economists showed 1-year LPR unanimously expected to fall 10 bp to 3.6 per cent when fixings are published Monday, marking the first decrease since January. Median estimates also point to a 10 bp decline in the 5-year rate, though some are looking for a bigger 15 bp which would match the record drop in May. Follows unexpected 10 bp cut to the 1-year MLF rate at the beginning of the week, reviving calls/expectations of meaningful easing measures in H2 against the backdrop of weakening economic data. Macro headwinds led by persistent Covid outbreaks and property market weakness. Abundant liquidity in combination with reluctant lending attitude among banks have stimulated talk of a liquidity trap, strengthening the case for a reduction in the 5y LPR for its implication on mortgage rates.
Japan inflation continues to creep higher:
Core CPI rose 2.4 per cent y/y in July, matching expectations, following 2.2 per cent in the prior month. Marks highest reading since December 2014. Ex-fresh food & energy measure was up 1.2 per cent vs consensus 1.1 per cent and prior 1.0 per cent. Both series posted notably firm 0.5 per cent m/m increases in seasonally adjusted terms. Year-ago energy contribution was unchanged, as higher electricity and gas were offset by slowing kerosene and gasoline. Elsewhere, non-fresh food remained a leading driver, while mobile phone devices accelerated into double digit growth. Press continue to highlight how core inflation continues to run higher than the BOJ’s 2 per cent target (now for a fourth straight month), though discussions remain speculative with no indication of a shift from the BOJ’s easing bias.
US markets
US equities finished higher in uneventful Thursday trading, though off best levels. More data released Thursday provided clues into the state of both the jobs and housing markets. Initial jobless claims fell to 250,000 for the week ended Aug. 13, while existing home sales dropped nearly 6 per cent in July.
A glimmer of hope from Fed Reserve minutes suggested the central bank said it remains committed to fighting inflation, but indicated it could adjust its pace of tightening based on market conditions.
Overnight the S&P 500 rose 0.23 per cent, while the Nasdaq inched 0.21 per cent .The Dow Jones Industrial Average added 0.06 per cent.
Retail earnings highlighted a still fairly resilient consumer and some progress on inventory and supply chain issues, though margin headwinds are expected to linger.
Shares of Cisco popped more than 6 per cent after the company beat estimates for its fiscal fourth quarter.
While Shares of Bed Bath & Beyond fell 26 per cent on Thursday morning as investors reacted to activist investor Ryan Cohen’s filing that he intends to sell his entire stake in the meme stock. The stock a recent favourite of the reddit crowd has now fallen 40 per cent in after market trading
Energy was the best performer sector on crude strength – Oil prices gained about 4 per cent on Thursday as positive US economic data and robust US fuel consumption offset concerns that slowing economic growth in other countries could undercut demand.
Oil and gas stocks alongside coal, copper and aluminium stocks outperformed
The real estate sector was weak with Federal Reserve officials predicting a slowdown in the housing market. Whilst rising mortgage rates are putting pressure on the consumer there hasn’t been anywhere near the excess of lending that there was in the 2000s.
A report from Fitch this week said that the Fed’s interest-rate moves had indeed made housing prices more likely to fall, and put the largest plausible drop at 15 percent. That would be a loss of around $60,000 for the average American homeowner, which is significant, but less than the nearly $120,000 that the average US home gained in value over the past two years.
In bitcoin news it looked like crypto would be a staple of TV commercials along with insurance, beer, and cars. But then crypto prices crashed with major firms in the sector spending just $36,000 on TV ads in July, down from a peak of $84 million in February (the month of the Super Bowl), Matt Damon’s infamous “fortune favors the brave” ad campaign, which cost an estimated $65 million, hasn’t aired since the Super Bowl
Company News
Antisense Therapeutics (ASX:ANP) today advised of outcomes from its collaboration to study the neurological aspects of Long COVID 19 with US based researchers led by global leader in the field, Dr Igor Koralnik, at the Northwestern Medicine Neuro-COVID clinic in Chicago. The study has clarified novel blood markers as potential diagnostic and therapeutic targets in the treatment of long COVID-19 patients. Three provisional patent applications have been filed in the US to seek protection for these new inventions. Dr George Tachas Director of Drug Discovery at Antisense Therapeutics said, “We’re delighted to report on the initial outcomes from this novel and leading scientific collaboration with Professor Koralnik and his team. He also added that the data has identified potential new avenues towards diagnoses and treatment of a disease that has negatively impacted the lives of over a hundred million people around the world. Shares are trading 22.73 per cent higher at 13.5cents.
Thorn Group (ASX:TGA) today announced a Special Dividend and proposed Capital Return and Share Consolidation. Following the sale of Radio Rentals and the recent restructure, management has continued to assess capital management initiatives and Thorn’s ability to return surplus funds to shareholders. On the recommendation of Thorn’s management, the directors have declared a fully franked special dividend of $0.03 cents per share, with the directors considering a further $0.12 per share return of capital. Collectively, shareholders have already received a total return of capital of approximately $52.6 million for the last two financial years. Shares are trading 14.6 per cent higher at 32 cents
Mt Monger Resources (ASX:MTM) has received assay results from its recent aircore drilling campaign at the Pt Kidman prospect, in Western Australia . Drilling has successfully intersected significant widths and grades of rare earth element mineralisation in all areas that were tested. Commenting on the results of the drilling program, Managing Director Lachlan Reynolds stated: “These assays confirm the presence of shallow, rare earth element mineralisation across three broad areas of the Pt Kidman prospect. Shares are trading 48 per cent higher at 18.5c
Commodities and the dollar
Gold is trading at US$1754.47 an ounce.
Iron ore is 0.2 per cent higher at US$100.60 a tonne.
Iron ore futures are pointing to a fall of 0.5 per cent.
One Australian dollar is buying 68.97 US cents.
