by Paul Sanger
The ASX has gained for a fourth-straight day after US stocks rose ahead of a key inflation report which could show American inflation has peaked.
Real Estate, Energy, bank, resources and tech stocks are leading the way.
It is the first time this month the ASX 200 climbed above the key 7,000-point mark.
At noon, the S&P/ASX 200 is 0.35 per cent or 24.50 points higher at 6989.00.
Futures
The SPI futures are pointing to a rise of 31 points.
Best and worst performers
The best-performing sector is Real Estate Investment Trusts, up 1.08 per cent. The worst-performing sector is Health Care, down 0.96 per cent.
The best-performing stock in the S&P/ASX 200 is Chalice Mining (ASX:CHN), trading 6.46 per cent higher at $4.45. It is followed by shares in HUB24 (ASX:HUB) and Brainchip (ASX:BRN).
The worst-performing stock in the S&P/ASX 200 is Link Administration Holdings (ASX:LNK), trading 20.31 per cent lower at $3.57. It is followed by shares in Ramsay Health Care (ASX:RHC) and Computershare (ASX:CPU).
Asian markets
Asia-Pacific markets were also higher on Tuesday as investors looked ahead to the U.S. inflation report for the month of August.
The Nikkei 225 in Japan gained 0.29%, and the Topix index ticked 0.27% higher.
South Korea’s Kospi rose 2.14% on its return to trade after a holiday Monday, and the Kosdaq jumped 2.09%.
Mainland China’s Shanghai Composite Advanced 0.23%, while the Shenzhen Component added 0.516%.
The Hang Seng index in Hong Kong was little changed in early trade. MSCI’s broadest index of Asia-Pacific shares outside Japan gained 0.51%.
China analysts see MLF rate remaining unchanged this week
Securities Daily discussed analyst expectations MLF rate will remain steady at the next operation 15-Sep. With another CNY600B in loans due for expiry, views were mixed on the size of rollover. Recalled last month PBOC issued CNY400B (vs CNY600B maturing) and unexpectedly lowered the interest rate 10 bp. Expectations largely based on loose liquidity conditions with money market rates currently lower than policy benchmarks. JLL Greater China suggested policy should continue to focus on the transmission from loose liquidity to lose credit via enhancements to efficiency and market mechanisms. Xinhua reported Premier Li Keqiang stressed efforts to ensure the implementation of policy measures to stabilise economic growth, employment and prices. Reaffirmed government will continue to roll out more phased policies to expand consumption and investment, though no specific new measures were outlined.
Japan MOF survey shows most firms aim to pass on higher costs
MOF BSI for large enterprises was 0.4 in Q3, following minus 0.9 in the previous quarter. Manufacturers improved to 1.7 from minus 9.9, led by sharp turnarounds in autos and production machinery sectors. Non-manufacturers deteriorated to minus 0.2 from 3.4 as financials and retail posed the biggest drags. Outlook indices point to moderate positive readings over the next two quarters. FY22 capex projections remain solid at 16.2% growth (vs 16.0% in Q2). Respondents indicated priority on software investments and tools. Underlying profit outlook turned marginally positive on slightly better revenues. Majority of firms intend to pass on higher costs, followed by other cost restructuring. Large enterprises are also revising balance between long-term contracts and spot market procurement, while small firms are looking to switch input suppliers.
BOJ set to end COVID funding support scheme, no rate hikes to support yen
Reuters sources said BOJ is expected to allow its pandemic-relief funding scheme to expire as scheduled this month and discuss adjustments to a policy guidance that flags the COVID-19 pandemic as the top economic risk. Formal decision to be made at the 21-22 Sep policy meeting, where board members are widely anticipated to keep main policy settings unchanged. Separately, Reuters also discussed the likelihood of a BOJ policy tightening in response to yen depreciation remaining remote. Sources said BOJ has no intention of raising interest rates or tweaking its dovish policy guidance to prop up the yen as current economic conditions don’t justify tweaking ultra-loose policy. BOJ officials widely share doubts that a small rate increase would stop yen weakness. Recalled MOF FX policy chief Kanda did not speak on behalf of the BOJ when he said the government was ready to use all options to fight excessive yen declines due to differences in mandate.
US markets
US equities were higher in uneventful Monday trading, ending just off best levels. S&P and Nasdaq both up for a fourth-straight day, extending last week’s rally that broke three-straight weekly declines.
The market was fairly quiet from a headline perspective, with focus tightly on tomorrow’s August CPI report and expectations for a month on month headline decline.
The Dow Jones Industrial Average gained 0.71 per cent, The S&P 500 rose 1.06 per cent. The Nasdaq Composite added 1.27 per cent,
Some recent developments, including a weakening US dollar and military success by Ukraine, appear to be boosting investor sentiment. Many traders are also optimistic about the August consumer price index report, which is scheduled for release on Tuesday morning.
Energy was the top performing sector, but the rally was broad. Oil majors, credit cards, autos, retail, homebuilders, tech hardware, airlines, trucking among best performers. Semis, steel, social media, biotech,, fertiliser, solar among laggards.
Reuters is reporting that the Department of Commerce is to announce next month additional restrictions on sale of semiconductors for AI and chipmaking tools to China. Its expected the Commerce Department will publish new regulations based on restrictions communicated in letters earlier this year to Applied Materials, Nvidia and Advanced Micro Devices.
Sources told Reuters the regulations would likely include additional actions against China and that the agency plans to add additional Chinese supercomputing entities to a trade blacklist. One source said the rules could also impose licence requirements on shipments to China of products that contain the targeted chips.
Over the past several years, supply chain disruptions in power grids, semiconductors, and the Suez Canal have taught us about the under-the-radar industries that keep the economy functioning.
In the US another major supply chain interruption could be around the corner. Starting today, US railroads said they would delay shipments of some materials in advance of a potential strike by more than 90,000 rail employees. A strike would halt all activity along the US’ 140,000-mile rail network with the US economy expected to lose $2 billion every single day that trains aren’t moving
Company News
Magnetite Mines (ASX:MGT) announced today that in response to rapidly-evolving market conditions and downstream industry feedback, it is increasing the planned production scale for the Razorback Iron Ore Project (Project) and assessing production options for high-value concentrate product streams. Accordingly, the Company’s current strategy of pursuing a small-scale, lower-capital expenditure development is being refocused in favour of a larger-scale, staged development that takes full advantage of the large resource base, available infrastructure and attractive mineral processing characteristics of Braemar ores. Magnetite Mines‘ CEO, Tim Dobson, said: “In raising its sights, the Company is responding to direct evidence of rapidly-evolving market conditions associated with the decarbonisation requirements of the iron and steelmaking industry. The Company has anticipated this shift and has strengthened its team accordingly. “The current Razorback Ore Reserve2 represents only 11% of the Company’s Mineral Resources3, so this strategic shift to a larger initial production scale better aligns the Project with the Resource potential, while still taking advantage of the abundant existing infrastructure that will support a pragmatic, staged development agenda. “The Company is committed to returning the highest possible value to shareholders, and this strategic shift is fully aligned with that objective.” Shares are trading unchanged at 26 cents.
Victorian gold explorer North Stawell Minerals Ltd (ASX:NSM) today provided an update on its exploration programs. Early results from an RC drilling program over the southern portion of the Company’s tenements and completed in June 2022 have added to the successes of the FY22 regional Phase 1 air core drill program. The greenfield Caledonia Prospect, identified via geophysics, has identified high-grade gold mineralisation 500m north of the historic Bonnie Dundee Mine which demonstrates prospectivity in the Germania-Darlington trend on EL7325. Caledonia is one of four high-grade gold occurrences within a 10km strike extent. North Stawell Minerals Chief Executive Russell Krause said: The discovery at the Caledonia Prospect highlights the gold potential of the GermaniaDarlington trend. Historic mining in the vicinity has produced at grades over 15g/t Au and to return intercepts with the same gold tenor on the same structure is highly encouraging. The Germania-Darlington trend has been extended north to the Wimmera Park prospect, drilled by NSM this season with exciting first-pass air core results. Shares are trading unchanged at 13.5 cents.
Critical Resources (ASX:CRR) today announced assay results from the current diamond drilling campaign at the Company’s Mavis Lake Lithium Project. The assay results have returned the highest grade lithium results in our Projects’ history. The assay data has confirmed lithium mineralisation is extending east, building on the significant intercepts seen in 2017 and 2018. Chairman, Mr Robert Martin said: “To receive such exceptional assays results and for them to contain the Company’s highest grading results of lithium mineralization ever to be intersected at Mavis Lake is absolutely outstanding. Shares are trading 22 per cent higher at 6 cents.
Recharge Metals (ASX:REC) today announced results from drill holes at the Brandy Hill South Project located within the Archaean age Gullewa Greenstone Belt in Western Australia. These latest results build on the encouraging results already received at the prospect. Recharge Managing Director Brett Wallace commented: “We are very excited to report not only multiple zones of copper mineralisation and broad zones of silver intercepts, but thick, shallow intercepts of nickel and cobalt mineralisation from the two remaining diamond holes. Shares are trading 13.2 per cent higher at 21 cents.
Sparc Technologies (ASX:SPN) today advised that it has entered into a Strategic Partnership Agreement with the Queensland University of Technology (QUT). The Strategic Partnership Agreement is an umbrella agreement that will support a long term partnership and commitment between the parties, affording Sparc the first right of refusal to commercialise technologies developed from projects Sparc undertakes with QUT. Shares are trading 17.9 per cent higher at 96 cents
Argent Minerals (ASX:ARD) today announced a maiden JORC 2012 Resource at its Mt Dudley Gold Prospect (ìMt Dudley Prospectî) within the Companyís Mt Dudley Gold Project on the eastern LachlanFold Belt, NSW. Argent Minerals Limited Managing Director Mr Kastellorizos commented: ìWe are pleased to have completed Argentsí first maiden JORC Resource over the Mt Dudley Gold Prospect. Our technical team believe the deposit has potential for more resource growth along the northern/southern portion proximal to the old historical mine area as this highly prospective zone remains completely untested by drillingî. Shares are trading 12.5 pert cent higher at 1.8c
Commodities and the dollar
Gold is trading at US$1722.79 an ounce.
Iron ore is 1.6 per cent lower at US$101.95 a tonne.
Iron ore futures are pointing to a rise of 0.90 per cent.
One Australian dollar is buying 68.79 US cents.
