by Paul Sanger
At noon, the S&P/ASX 200 is 0.63 per cent or 43.70 points higher at 7005.50.
The SPI futures are pointing to a rise of 59 points.
Asian equities are mostly higher Wednesday. The Kospi (+0.37 per cent) opened with moderate gains, with the Nikkei flat (0.08 per cent) and the Hang Seng futures slightly higher.
Best and worst performers
The best-performing sector is Information Technology, up 1.91 per cent. The worst-performing sector is Consumer Staples, down 1.21 per cent.
The best-performing stock in the S&P/ASX 200 is WiseTech Global (ASX:WTC), trading 10.04 per cent higher at $58.32. It is followed by shares in Domino Pizza Enterprises (ASX:DMP) and Netwealth Group (ASX:NWL).
The worst-performing stock in the S&P/ASX 200 is EML Payments (ASX:EML), trading 16.33 per cent lower at $0.83. It is followed by shares in Nanosonics (ASX:NAN) and Coles Group (ASX:COL).
Australia’s food and drink retailers reveal extent to which cost pressures are affecting earnings
The ASX consumer staples sector has underperformed the broader market, with a 5 per cent week-to-date decline. Earnings have driven most of the decline, with Coles (ASX:COL) highlighting a top-line boost from higher grocery selling prices but also noting inflation is increasing the cost of doing business. This comes after drinks and hospitality business Endeavour Group’s (ASX:EDV) results showed inflation and staff and input shortages impacted sales at the company’s retail division. Meanwhile, Domino’s Pizza (ASX:DMP) EBIT decline was driven in part by rising raw material costs that prompted higher prices for pizza. At the same time, there are early indications that pricing pressures are peaking in some categories. Domino’s noted that the price of key ingredients like wheat and cheese is beginning to flatten, while Coles anticipates inflation to moderate in H2 as crop supply increases and the cost of vegetables like lettuce retreats from abnormally high levels.
China economic challenges mounting
More bearish headlines underscore the vulnerabilities in China’s economic recovery. Drought depleted the Yangtze River to record-low levels for this time of year and interrupted electricity generation at many key hydropower plants, sparking energy chaos across many parts of the country. Shanghai has implemented power usage curbs for two days from Monday. Concerns that forest fires are breaking out in southwestern regions of Chonqging and Sichuan are threatening the important autumn harvest
On markets, the US Commerce Department added seven China-related entities, mostly related to aerospace, to its export control list, citing national security and foreign policy concerns. Currency control is effectively seen as one of the last policy levers to support the economy, although the leeway is limited by risks of accelerated capital outflows and volatility.
Japan to ease COVID entry requirements further
Japan is planning to stop requiring proof of a negative COVID-19 test result from entrants to the country as long as travellers have completed three rounds of vaccinations, while also raising the cap on the number of entrants from the current 20K per day. Prime Minister Kishida is expected to make an announcement Wednesday. Japan is also set to allow more foreign tourists by allowing unguided tours, following a move in June to limit entrants to small guided tour groups from a list of designated countries deemed at low-risk of virus transmission. One source suggested the cap could be raised to 50K. Still, the timing of the relaxation is still under consideration, and whether tourists will return quickly remains unclear at a time when oil prices have surged globally amid Russia’s war in Ukraine. Separately, Kyodo cited a survey showing 72 per cent of respondents are unlikely to visit Japan if entry controls continue.
Company news
Kingston Resources (ASX:KSN) has reported high-grade copper-gold assay results from the maiden Jack’s Hut drilling program at Mineral Hill. Five drill holes were designed to test the exploration potential within a zone along the Jack’s Hut trend. Two of the drill holes targeted copper-gold mineralisation in the hanging wall of the historic underground Jack’s Hut Mine. Both of these intercepted high-grade copper-gold mineralisation inside a broader lower grade mineralised zone. Kingston Resources Managing Director, Andrew Corbett, said: “We are very excited to report that our initial Jack’s Hut exploration drilling program has delivered near surface, high grade copper intercepts, in close proximity to our operating mill.” Shares are trading almost 11 per cent higher at 9 cents.
Following strong moves in lithium stocks overnight, Arcadia Minerals (ASX:AM7) today announced an updated Mineral Resource Estimate for its lithium project in Namibia. Arcadia is proceeding with large-scale test work to investigate the best recovery processes to possibly produce a battery-grade lithium carbonate product Shares are trading 97.4 per cent higher at 39 cents.
Accelerate Resources (ASX:AX8) has announced that a significant new near-surface zone of manganese mineralisation has been discovered through the company’s maiden exploration drilling program. The thickness of the newly discovered zone represents the largest known intersection of manganese-rich mineralisation in the Woodie Woodie North area to date. Managing Director Yaxi Zhan commented, “Our maiden drilling program at Woodie Woodie North has exceeded our expectations… We are well positioned to become a future supplier of premium Manganese products, to meet the surging demand of manganese in the EV supply chain.” Shares are trading 11.1 per cent higher at 4 cents.
Commodities and the dollar
Gold is trading at US$1747.00 an ounce.
Iron ore is 1.6 per cent higher at US$102.30 a tonne.
Iron ore futures are pointing to a rise of 0.93 per cent.
One Australian dollar is buying 69.07 US cents.
