by Paul Sanger
The ASX is following Wall Street’s rebound, as the local market waits for further indications that the most-aggressive rate hikes are done.
Lithium stocks are very much in play again today. Pilbara Minerals (ASX:PLS) up 5.82 per cent, Core Lithium (ASK:CXO) up 4.59 per cent, Lake Resources (ASX:LKE) up 4.55 per cent, Sayona Mining (ASX:SYA) up 7.27 per cent.
At noon, the S&P/ASX 200 is 0.74 per cent or 50.00 points higher at 6779.30.
The SPI futures are pointing to a rise of 51 points.
Best and worst performers
The best-performing sector is Information Technology, up 2.56 per cent. The worst-performing sector is Energy, down 4.00 per cent.
The best-performing stock in the S&P/ASX 200 is Megaport (ASX:MP1), trading 8.78 per cent higher at $8.05. It is followed by shares in Novonix (ASX:NVX) and Life360 (ASX:360).
The worst-performing stock in the S&P/ASX 200 is Woodside Energy (ASX:WDS), trading 7.07 per cent lower at $31.57. It is followed by shares in Perpetual (ASX:PPT) and Beach Energy (ASX:BPT).
Asian markets
Markets in Asia-Pacific are mixed this morning following Wall Street’s solid rebound rally overnight in the best day since 10 August for all three averages. Investors will also be closely watching Federal Reserve Chair Jerome Powell’s speech Thursday as markets brace for another 75 basis-point hike later this month.
In Japan, the Nikkei 225 is 1.62 per cent higher, the Topix is up 1.6 per cent and the Kospi in South Korea is up 0.33 per cent.
In mainland China, the Shanghai Composite and the Shenzhen Component is trading slightly lower and the Hang Seng Index has slipped 0.4 per cent, while the Hang Seng Tech Index is slightly higher.
Global coal shortage to further deteriorate amid China’s drought concerns
China’s drought has sent coal prices surging as traders anticipate that the lack of hydroelectric generation will force the country to burn more coal to meet electricity demand this winter. China’s rising coal consumption threatens to worsen a global shortage as power producers in Europe and the United States also turn back to solid fuel in the face of soaring gas prices. It marks a significant turnaround from the first half of the year when heavy rainfall and an abundance of hydro generation enabled China to reduce coal use and rebuild depleted inventories. Note that hydroelectric power generation has fallen sharply and is likely to remain depressed throughout the remainder of 2022 and into 2023 (Reuters).
Japan GDP revision slightly firmer than expected
Q2 GDP growth revised to 3.5 per cent q/q annualised, compared to consensus 2.9 per cent and first preliminary print of 2.2 per cent. Main factor was private demand as non-residential investment was upgraded moderately following the MOF corporate survey release, while drag from inventories eased. External demand also contributed marginally on a slight downward adjustment to imports. Looking ahead, latest JCER consensus forecast looks for 2.7 per cent expansion in Q3, which would break from the up-and-down quarterly volatility seen over the past year. Recall the preliminary report was already seen as backward-looking in the context of renewed Covid risk as case numbers have rebounded to new records. However, there have been no major downgrades to near-term forecasts as the government has refrained from re-instating emergency restrictions. Private sector sees FY22 growth at 1.8 per cent, below BOJ’s projection of 2.4 per cent and government forecast of 2.0 per cent. Policy mix to remain supportive with another fiscal support package aimed at inflation relief in the pipeline, while BOJ maintains easing.
Japan FX verbal intervention losing impact
Nikkei discussed growing FX market confidence that authorities will not intervene to support the yen as a factor in the latest selloff, with further declines expected. Finance Minister Shunichi Suzuki voiced concern about the yen’s “one-sided” movements and said “necessary steps” would be taken if it continues. But lack of elaboration gave the impression that verbal warnings would not be backed up by actual intervention. Goldman Sachs chief Japan economist Naohiko Baba noted prior interventions were conducted under extraordinary circumstances, while current depreciation is driven mainly by fundamentals, and the US would likely be less than receptive to such intervention now, especially given that a strong dollar helps its efforts to tamp down inflation. Story noted speculative short yen positions increased for three straight weeks from mid-August.
Chengdu extends lockdown, adding to tech supply chain woes
Bloomberg reported Chengdu city extended a weeklong lockdown in most downtown areas after Covid-19 cases increased. Authorities said mass testing will continue and pledged to eliminate community spread of the virus within a week. Nikkei highlighted ongoing struggles among Apple suppliers in affected areas. Companies operating in Shenzhen have already struggled with staff shortages brought on by strict COVID-19 restrictions affecting several districts in the city, and there has been no indication of when those restrictions might be eased. Foxconn and Jabil are operating their facilities in Chengdu under “closed-loop” management, granted to those on the government’s whitelist. Some nearby display materials makers have had to suspend production as they could not qualify for the list. Also, sources said that between 30 per cent and 50 per cent of Foxconn and Jabil’s planned output in Chengdu facilities in August was affected by electricity rationing last month.
Company news
The Board of Ionic Rare Earths (ASX:IXR) today announced it received a grant of 1.72 million pounds ($2.9 million) from the UK Government Advanced Propulsion Centre (APC) to Seren Technologies, a 100 per cent-owned subsidiary. Commenting on the successful application and award, Mr Tim Harrison, IonicRE’s Managing Director said: “This is a tremendous endorsement from the UK Government and the APC on the potential for scaling our technology offering from SerenTech. This grant validates the significance of magnet recycling in a tight supply market as well as pointing to the additional value for IonicRE shareholders in the longer-term.” Shares are trading 7.32 per cent higher at 4.4c.
Anson Resources (ASX:ASN), through its 100 per cent owned subsidiary A1 Lithium Inc, today announced the completion of the Definitive Feasibility Study (DFS) for Phase 1 of the Paradox Lithium Project, located in Utah, USA. The DFS results confirm the project’s advanced potential to become a major supplier of high-purity, battery-grade lithium carbonate into the US EV market, initially producing 13,000 tonnes per annum of high-purity lithium carbonate over an initial 10 years of project life. Anson’s Executive Chairman, Mr Bruce Richardson, stated: “We are very excited to deliver the Paradox Lithium Project Phase 1 DFS to market. The DFS confirms the technical and financial viability of a major new source of high purity Lithium Carbonate available for the rapidly growing US market. The Project delivers industry leading ESG credentials based on direct lithium extraction utilising Sunresin technology using lower energy and water consumption, and with spent brine being reinjected back into the Paradox.” Shares are trading 31.19 per cent higher at 38.7 cents.
Pacgold (ASX:PGO) today provided an update on the Alice River drilling program. A total of 22 drill holes have been completed on the Central Target in the current program, with assay results pending for 12 drill holes. The current drilling program is approximately 50 per cent advanced. Pacgold Managing Director Tony Schreck said: “The intersection of visible gold over a sixteen metre zone is a stunning outcome and represents the first of what we believe could be potential multiple high-grade zones developed along the F1a zone.” Shares are trading 11.9 per cent higher at 4.4 cents.
Commodities and the dollar
Gold is trading at US$1716.26 an ounce.
Iron ore is 0.4 per cent lower at US$96.90 a tonne.
Iron ore futures are pointing to a rise of 0.58 per cent.
One Australian dollar is buying 67.42 US cents.
