by Paul Sanger
The ASX had a solid start to the trading session Tuesday, recovering some of yesterday’s material fall.
At noon, the S&P/ASX 200 is 0.48 per cent or 33.50 points higher at 6999.00.
The SPI futures are pointing to a rise of 32 points.
Best and worst performers
The best-performing sector is Energy, up 1.51 per cent. The worst-performing sector is Health Care, down 0.31 per cent.
The best-performing stock in the S&P/ASX 200 is Paladin Energy (ASX:PDN), trading 6.49 per cent higher at $0.82. It is followed by shares in Chalice Mining (ASX:CHN) and InvoCare (ASX:IVC).
The worst-performing stock in the S&P/ASX 200 is Sandfire Resources (ASX:SFR), trading 5.51 per cent lower at $4.46. It is followed by shares in Lynas Rare Earths (ASX:LYC) and Kelsian Group (ASX:KLS).
Asia-Pacific
Shares in the Asia-Pacific were also higher on Tuesday after sharp falls to start the week following Fed Chair Jerome Powell’s hawkish speech in Jackson Hole.
Japan’s Nikkei 225 rose 0.78 per cent and the Topix index gained 0.85 per cent.
The Kospi in South Korea added 0.85 per cent and the Kosdaq increased 1.09 per cent..
MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.22 per cent.
Japan jobless rate remains steady: Unemployment rate was unchanged at 2.6 per cent in July, matching expectations. Total unemployed fell sequentially for the first time in three months, offset by a decline in labour force. Total employment edged lower, driven mainly by regular labour. Job offers to applicants ratio was 1.29, compared to consensus and prior month’s 1.27. Remains the highest level since April 2020 (1.31). Offers grew for the fifth straight month and helped by a decline in applications. Attention remains on wage growth as a key factor the BOJ has repeatedly cited as necessary for sustaining inflation. While anecdotal evidence has pointed to upward pressure on wages, macro data have yet to show a meaningful acceleration. Elevated CPI inflation also erodes real incomes. Recent Reuters survey found a strong majority of economists do not see nominal wage growth catching up to inflation over the coming year.
US businesses more worried about China Covid than bilateral tensions: Reuters cited an annual survey from US-China Business Council showing strict COVID-19 control measures in China have overtaken sour US-China relations as the top concern of US companies in the country. More than half of its firms reported the issue as a reason to cancel or delay investments. Most of the companies surveyed said negative effects of Beijing’s COVID measures were reversible, but 44 per cent said it would “take years to restore business confidence.” In the past year, 24 per cent of companies have moved parts of their supply chains out of China, compared to 14 per cent in the 2021 survey. Optimism in five-year business outlook for China has dropped from 88 per cent in 2013 to 51 per cent in 2022. Still, the report noted companies overwhelmingly remain profitable in China with 63 per cent of respondents saying profitability increased in the last year.
US-China audit deal met with caution: Discussion articles since the US-China audit deal was announced reverted to caution after initially positive headline effects. Pundits highlighted the lack of details in the agreement with already some inconsistencies when comparing statements from the two sides (FT). As China works out how it wants to strike the balance of maintaining US listings and safeguarding political and national security, they may be more involved in the process than what the PCAOB envisaged, and there will still be a high chance of Chinese firms delisting from US markets. Reuters noted questions remain over China’s level of compliance, leaving the deal open to potential clashes. Reuters also discussed the backdrop of broader concerns about China’s economic slowdown, sharply rising US interest rates, and strained US-China relations as factors discouraging investors from returning to the market.
US Markets
US equities were lower in very quiet Monday trading. Stocks fell on Monday as traders fought to regain their footing from the prior week’s sell-off amid increasing concerns over rising rates and tighter US monetary policy.
The week ahead will see investors focused on China’s PMI, the Eurozone CPI on Wed and the US jobs report on Friday
Monday’s stock moves also coincided with the yield on the 2-year Treasury note notching a fresh 15-year high as rate hike fears persisted
The Dow Industrial Average slid 0.57 per cent,. The S&P 500 slipped 0.67 per cent and the Nasdaq Composite slumped 1.02 per cent
During Monday’s session, the Dow briefly turned positive after falling more than 300 points earlier in the day. 3M and Salesforce were the biggest laggards in the 30-stock Dow Industrials. Those losses were mitigated by nearly 1 per cent advances in Walmart and Chevron..
Tech was the worst-performing S&P 500 sector as rates rose, while energy and utilities outperformed.
Tech hardware, semis, software, media and entertainment, pharma, credit cards, trucking, airlines among the worst performers.
Energy was the standout on a good day for crude. Oil prices settled up more than 4 per cent on Monday, extending last week’s gain, as potential OPEC+ output cuts and conflict in Libya helped to offset a strong US dollar and a dire outlook for US growth.
Of note overnight Honda and LG Energy Solution said overnight that they would jointly build a battery plant in the United States for a slate of new electric cars the automaker is working on.
Moderna is suing Pfizer and BioNTech, accusing the companies of infringing on Moderna’s patents for the mRNA technology used to develop the Covid-19 vaccine.
Abbott will restart production of its Similac baby formula. The reopening of a Michigan plant that had been shut in February over contamination concerns is meant to ease a US shortage of baby formula. The factory closure of course was a gift for Australian producers like BUBS.
The first entirely hydrogen-powered passenger train service debuted last week in northwest Germany. The trains can run all day – up to 620 miles – on a single tank of hydrogen,
Company News
Cobre (ASX:CBE) continues to kick goals, today they announced that their fifth step out drill hole of the ongoing diamond drill programme at the Ngami Copper Project in the Kalahari Copper Belt , Botswana, has returned another significant copper intersection. Cobre Executive Chairman and Managing Director, Martin Holland, said: “We’re delighted with the results from the latest drill hole at NCP. Given the significant copper results and strong exploration potential of the project, the Company has mobilised a second drill rig to site with plans underway to deploy additional rigs to the project by year end in order to unlock this exciting copper discovery at Ngami.” Shares are trading 6.2 per cent lower at 53 cents.
Immutep (ASX:IMM) a biotechnology company developing novel LAG-3 related immunotherapy treatments for cancer and autoimmune disease, today announced the grant of a new Japanese patent. Immutep CEO, Marc Voigt, noted: “We are pleased to see continued progress in building our global patent estate around efti. This Japanese patent, along with the equivalent patents granted in other key global markets, underpin the investments we have made to develop this unique candidate and give Immutep important strategic options.” Shares are trading 1.8 per cent higher at 29 cents.
AD1 Holdings (ASX:AD1) a technology company with a growing portfolio of market-leading software businesses today announced that it has entered into a share sale agreement for the acquisition of Scout Talent Group, Scout is the market leader in talent acquisition software, for a a total consideration of $65m. AD1 Holdings, a technology company with a growing portfolio of market-leading software businesses, today announced that it has entered into a share sale agreement for an up front consideration of $65 million dollars for the acquisition of Scout Talent Group, who is the market leader in talent acquisition software. AD1 CEO Brendan Kavenagh commented “ AD1’s strategy has been focused on delivering new and attractive SaaS verticals, specifically in the global online HR talent acquisition and staff development markets.” Shares are trading 17.7 per cent higher at 2 cents.
Woodside (ASX:WDS) today reported a five-fold increase in net profit to $US1.64 billion ($2.4 billion) for the half year powered by a war-fuelled doubling of oil and gas prices that added $US2.5 billion to its revenue. Woodside chief executive Meg O’Neill said the result came from higher prices and better operational performance. Shareholders will also receive $US2.07 billion via a fully franked dividend of $US1.09 a share made up of 76c from an allocation of 80 per cent of the net profit after tax and 33c from cash payments from BHP after the sale of its assets was completed. Shares are trading 1.39 per cent higher at $35.84
Commodities and the dollar
Gold is trading at US$1736.88 an ounce.
Iron ore futures are pointing to a fall of 3.2 per cent.
One Australian dollar is buying 68.98 US cents.
