by Paul Sanger
At the closing bell, the S&P/ASX 200 was 0.95 per cent or 67.60 points lower at 7046.90.
The Dow Jones futures are pointing to a fall of 172 points.
The S&P 500 futures are pointing to a fall of 25.25 points.
The Nasdaq futures are pointing to a fall of 98.75 points.
The SPI futures are pointing to a fall of 64 points when the market next opens.
Best and worst performers
All sectors closed in the red. The sector with the fewest losses was Health Care, down 0.02 per cent. The worst-performing sector was Consumer Discretionary, down 1.94 per cent.
The best-performing stock in the S&P/ASX 200 was NIB Holdings (ASX:NHF), closing 7.02 per cent higher at $7.78. It was followed by shares in EML Payments (ASX:EML) and Pilbara Minerals (ASX:PLS).
The worst-performing stock in the S&P/ASX 200 was Adbri (ASX:ABC), closing 16.92 per cent lower at $2.21. It was followed by shares in Magellan Financial Group (ASX:MFG) and Ramelius Resources (ASX:RMS).
Asian markets
Shares in the Asia-Pacific region are mixed on Monday as concerns over aggressive Fed hikes reemerge.
Chinese markets rose after China’s central bank cut its one-year benchmark lending rate by 5 basis points to 3.65 per cent and its five-year rate by 15 basis points to 4.3 per cent. “We think the asymmetric cuts… aim to support long-term borrowing and in particular mortgages, as overall credit supply remains ample while credit demand is sluggish,” analysts wrote in a Goldman Sachs Economic Research note Monday.
Hong Kong’s Hang Seng index is up around 0.2 per cent. The Shanghai Composite is 0.57 per cent higher, and the Shenzhen Component has gained 0.899 per cent.
Elsewhere in Asia, the Nikkei 225 in Japan has pared some losses, but is down 0.57 per cent and the Topix index has slipped 0.23 per cent.
South Korea’s Kospi has shed 1 per cent and the Kosdaq has lost 1.4 per cent.
MSCI’s broadest index of Asia-Pacific shares outside of Japan is 0.48 per cent lower.
Singapore PM says anyone who thinks war cannot break out in Asia needs to “get real”
Singapore’s Prime Minister Lee Hsien Loong has warned that, although the country’s neighbourhood had enjoyed peace for a long period, those who think war cannot break out in the region need to “get real”. Singapore’s external environment has become very troubled, he said, as ties between US and China worsen. Although the US and China need to work together on many pressing global issues, their tense relationship is making this almost impossible. He also said the Ukraine war has clouded Singapore’s economic outlook and that the era of globalisation is over just as China’s growth and exports are slowing. Countries must re-examine their own supply chains. To counter, Singapore needs to press ahead with economic upgrading and worker upskilling. The need to attract overseas talent is also paramount.
RBNZ Deputy Governor Hawkesby says OCR could rise to as high as 4.25 per cent
In an interview with Bloomberg, RBNZ Deputy Governor Hawkesby said the central bank is open to raising the official cash rate (OCR) to as much as 4.25 per cent, higher than the 4.1 per cent peak rate in mid-2023 modelled in the August Monetary Policy Statement. Recall that RBNZ last week signalled a more aggressive tightening path, noting inflation pressures were stronger than it assumed in May. Hawkesby said the RBNZ is being deliberately ambiguous to reflect uncertainty around where the OCR will end. He added he wants the OCR comfortably above neutral to slow the economy and cool inflation pressures. The RBNZ noted last week it is debating whether the neutral rate is higher than its previous estimate of 2.00 per cent, and Hawkesby said members have discussed a range of 2-3 per cent. He also acknowledged the RBNZ is getting closer to a point where policy decisions are becoming more finely balanced.
Sichuan extends power cut order as drought persists
Bloomberg reported that Sichuan has extended its power cut order, activating the highest emergency response Sunday as severe heatwave and drought continued. The order curtailed power supply to some industrial users till 25 August from a previous end date of 20 August as power usage surged 25 per cent higher y/y amid high temperatures. The lack of rainfall means hydropower generation has plunged 51 per cent in the same time as reservoir water levels stand at 1.2 billion cubic metres, 4 billion below last year’s levels. Toyota Motor (7203.JP) and CATL (300750.CH) have already closed factories for several days, with other companies operating at reduced output. Reuters added that 66 rivers in Chongqing region have dried up, with the region’s rainfall down 60 per cent from seasonal norm. Emergency ministry data Thursday said high temperatures in July alone caused direct economic losses of CNY2.73B ($400 million), affecting 5.5 million people and 457,500 hectares of land.
China media downplays inflation risk
Xinhua cited officials and analysts with the view that China can keep inflation contained despite global pressures and volatility in food prices. NBS said recent bumper harvests have provided an abundance of domestic supply. Efforts have been made to ensure grain output in autumn. Thinktank researchers see the impact from elevated import prices on CPI inflation as limited, and expect to see easing going forward. The article discussed progress in stabilising domestic energy prices to insulate against international volatility. NDRC said there is ample energy storage and supply despite some regions experiencing relatively tight supply during peak hours due to economic recovery and continuous high temperatures. NBS noted monetary policy is not conducive for price hikes given avoidance of “flood-like stimulus”. Recalled that the PBOC reaffirmed confidence in achieving its inflation target of around 3 per cent for the year, though warning that monthly readings might top that level in a few months. NBS echoed the possibility of some overshoot in monthly readings, although China has the conditions to keep prices generally stable for the whole year.
Copper shortfall a serious threat to global economy and net-zero emissions goals
The potential supply-demand gap in copper is expected to place unprecedented strain on supply chains as the energy transition intensifies. S&P mentions that unless massive new supply comes online in a timely manner, the goal of Net-Zero Emissions by 2050 will be short-circuited and remain out of reach. According to S&P, copper demand is projected to grow from 25 million tonnes today to about 50 million tonnes by 2035, and expected to further grow to 53 million tonnes by 2050. The shortfall between copper supply and demand is expected to reach as high as 9.9 million tonnes in 2035 based on a continuation of current trends in capacity utilisation of mines and recycling of recovered copper.
Company news
Anson Resources (ASX:ASN) today announced a major upgrade to its JORC mineral resource estimate for the Paradox Lithium Project in Utah, USA. The delivery of the mineral resource upgrade represents a significant achievement in the development pathway of the project, and it will now be incorporated into the project’s detailed feasibility study, which is being finalised by global engineering group Worley for release in the near future. Shares closed 37.93 per cent higher at 20 cents.
Dreadnought Resources (ASX:DRE) has announced that infill RC drilling has continued to intersect thick, mineralised, rare earth elements within its 100 per cent owned Mangaroon Project. Dreadnought’s Managing Director, Dean Tuck, commented: “With over twelve thousand metres of drilling now complete at Yin, our understanding of the petrophysical properties has significantly improved.” He further added that this understanding has led to the identification of the Yin trend extending for 16km, of which only 3km has been drill tested. Shares closed 4.8 per cent higher at 11 cents.
Australian Pacific Coal (ASX:AQC) has received a non-binding alternative proposal to the sale of the Dartbrook Project to Nathan Tinkler and his backers, who are understood to be proposing a 30c a share takeover offer, and would also refinance debts worth about $60 million. Shares closed 88.89 per cent higher at 25.5 cents.
Commodities and the dollar
Gold is trading at US$1743.01 an ounce.
Iron ore is 0.9 per cent lower at US$99.70 a tonne.
Iron ore futures are pointing to a rise of 1.83 per cent.
Light crude is trading $1.52 lower at US$88.92 a barrel.
One Australian dollar is buying 69.01 US cents.
