by Paul Sanger
The ASX started off optimistically on Tuesday, but reversed early gains as investors mulled the Reserve Bank’s latest rate hike, closing down on the day. The RBA’s latest raise of 0.5 of a percentage point continues the central bank’s aggressive policy to try and tackle soaring inflation in Australia.
At the closing bell, the S&P/ASX 200 was 0.38 per cent or 25.70 points lower at 6826.50.
Futures
The Dow Jones futures are pointing to a rise of 90 points.
The S&P 500 futures are pointing to a rise of 11.75 points.
The Nasdaq futures are pointing to a rise of 58.75 points.
The SPI futures are pointing to a fall of 24 points when the market next opens.
Minerals
Coal, one of Australia’s biggest commodity exports, has surged to record levels as a result of the energy crisis, with the price of Newcastle coal soaring to all-time highs as miners cash in amongst a deepening energy crisis in Europe. The price of thermal coal rose to a new high recently with Newcastle futures trading above $648 dollars a tonne, more than doubling since the start of 2022. Australian coal producers continue to climbed higher again today, with Whitehaven (ASX:WHC) up 3.65 per cent, Stanmore Resources (ASX:SMR) up 4.74 per cent, Yancoal (ASX:YAL) up 634 per cent and Terracom (ASX:TER) up 3.54 per cent.
Lithium stocks were also back in focus today as the demand for lithium continues to boom, driven by rocketing growth in EV production, which has sent the price of the battery critical metal up more than 400 per cent over the past year. Pilbara Minerals (ASX:PLS) closed up 7.03 per cent, Core Lithium (ASX:CXO) 9.93 per cent, Vulcan Resources (ASX:VUL) 4.05 per cent, Sayona Mining (ASX:SYA) 5.88 per cent, Lake Resources (ASX:LKE) 9.55 per cent.
Best and worst performers
The best-performing sector was Information Technology, up 0.67 per cent. The worst-performing sector was Utilities, down 1.86 per cent.
The best-performing stock in the S&P/ASX 200 was Core Lithium (ASX:CXO), closing 9.93 per cent higher at $1.50. It was followed by shares in Lake Resources (ASX:LKE) and Paladin Energy (ASX:PDN).
The worst-performing stock in the S&P/ASX 200 was Super Retail Group (ASX:SUL), closing 6.21 per cent lower at $9.66. It was followed by shares in Breville Group (ASX:BRG) and Sonic Healthcare (ASX:SHL).
Asian markets
Shares in the Asia-Pacific are trading mixed.
Japan’s Nikkei 225 has recovered from earlier losses to rise fractionally and the Topix index is near the flat line.
The Hang Seng index in Hong Kong has given up early gains to fall 0.42 per cent. Mainland China’s Shanghai Composite has added 1.01 per cent and the Shenzhen Component is 0.655 per cent higher.
The Kospi in South Korea is little changed and the Kosdaq has gained 0.68 per cent.
MSCI’s broadest index of Asia-Pacific shares outside of Japan is about flat.
RBA hikes cash rate by 50 bp to 2.35 per cent, as widely expected
September policy statement noted that the latest rate increase will help return inflation to target and create a more sustainable balance of demand and supply in the economy. Repeats that it expects to increase rates further over coming months, but policy is not on a pre-set path. Said it is committed to returning inflation to target over time while keeping the economy on an even keel (vs August statement in which it placed a high priority on returning inflation to target). Acknowledges higher inflation and rates are putting pressure on household budgets, with full effects of higher rates yet to be felt in mortgage payments. Some economists expect the RBA to slow the pace of tightening given headwinds from inflation, rising interest rates and falling house prices. Cash rate expected to move into contractionary territory from October (based on a neutral estimate of “at least 2.5 per cent”), and peak at just above 3.00 per cent in early 2023.
Company news
ABX Group (ASX:ABX) announced today that it has commenced its maiden REE resources estimation for Deep Leads and has received assays from most of its winter drilling campaign that expanded the lateral extent of REE mineralisation by 230 per cent. ABX’s Deep Leads REE mineralisation is enriched in the more valuable permanent magnet type of REE and includes true ionic adsorption clay zones that achieve 50 per cent to 75 per cent leaching extraction rates, which are high extraction rates by world standards. Shares in ABX closed 32 per cent higher at 16.5 cents.
Commodities and the dollar
Gold is trading at US$1716.89 an ounce.
Iron ore is 3.2 per cent higher at US$98.00 a tonne.
Iron ore futures are pointing to a rise of 1.98 per cent.
Light crude is trading $0.17 lower at US$88.65 a barrel.
One Australian dollar is buying 67.92 US cents.
