by Paul Sanger
Around $60 billion has been wiped off the value of Australian shares after US inflation rose faster than expected in August, prompting fears of more aggressive interest rate rises by the US central bank.
At the closing bell, the S&P/ASX 200 was 2.58 per cent or 181.10 points lower at 6828.60.
Futures
The Dow Jones futures are pointing to a rise of 2 points.
The S&P 500 futures are pointing to a rise of 0.75 points.
The Nasdaq futures are pointing to a fall of 6.50 points.
The SPI futures are pointing to a fall of 184 points when the market next opens.
Best and worst performers
All sectors closed in the red. The sector with the fewest losses was Utilities, down 1.43 per cent. The worst-performing sector was Real Estate Investment Trusts, down 4.18 per cent.
The best-performing stock in the S&P/ASX 200 was Computershare (ASX:CPU), closing 1.19 per cent higher at $24.73. It was followed by shares in Coronado Global Res (ASX:CRN) and ResMed (ASX:RMD).
The worst-performing stock in the S&P/ASX 200 was Lake Resources (ASX:LKE), closing 16.54 per cent lower at $1.06. It was followed by shares in Megaport (ASX:MP1) and Pinnacle Investment (ASX:PNI).
Asian markets
Shares in the Asia-Pacific have dropped sharply after indexes on Wall Street plunged following a higher-than-expected US consumer price index report for August.
Japan’s Nikkei 225 has dropped 2.7 per cent, and the Topix index has fallen 2 per cent. The Japanese yen is trading at 143.75 per dollar after hovering around its weakest levels since September 1998.
The Hang Seng index in Hong Kong has dipped 2.55 per cent, and the Hang Seng Tech index has fallen 2.96 per cent.
The Kospi in South Korea has lost 1.34 per cent and the Kosdaq has declined 1.67 per cent. The South Korean won has passed the 1,390-mark against the greenback and is trading at 1,391.98 against the dollar, around the weakest levels since March 2009.
Mainland China’s Shanghai Composite has lost 1.02 per cent and the Shenzhen Component has fallen 1.496 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan has fallen 2.28 per cent.
BOJ checks FX rates in apparent preparation for currency intervention
Kyodo sources said BOJ conducted a so-called rate check, a move interpreted as a precursor to direct currency intervention. Stream of verbal intervention continued with Finance Minister Suzuki directly affirming a reporter’s question about whether direct intervention was among the options being considered. Suzuki and other officials had repeatedly said all options were on the table, though refrained from discussing specifics. Vice Finance Minister for international affairs Kanda said the government would respond “appropriately” to the yen’s decline. Announcement effects lifted the yen to the 143 range against the dollar after trading close to 145 in earlier reactions to stronger than expected US CPI. Article also flagged Fed and the BOJ meetings scheduled next week, with their contrasting policy stances expected to become even more evident.
Consensus affirms expectations for PBOC to keep MLF rate steady with partial rollover
Reuters survey found 27 out of 28 market watchers see the one-year MLF rate unchanged at 2.75 per cent on Thursday. With CNY600B ($86.14B) in loans maturing, 17 expected the PBOC to partially renew the maturing loans, while the other 10 projected a full rollover. Some traders and analysts said authorities may hold off from easing in the near term, but they still expect some liquidity injection later this year due to heavy MLF maturity, which totalled CNY2.6T in the run-up to the year-end. Some noted inflationary pressures in China were very low by global standards, allowing the PBOC more room to manoeuvre on monetary policy if needed. Findings affirm earlier mainland media articles of several local analysts who also expected no change in the interest rate though similarly split on the rollover amount as liquidity remains ample. However, multiple reports have noted financing conditions remain relatively tight, which policy makers have pledged to address.
Company news
Altech Chemicals (ASX:ATC) today announced that it has executed a Joint Venture Shareholders’ Agreement with world-leading German battery institute Fraunhofer IKTS to commercialise IKTS’ revolutionary CERENERGY Sodium Alumina Solid State Battery. Altech, inclusive of associated entity Altech Advanced Materials AG, will be the majority owner at 75 per cent of the JV company, which will commercialise a 100 MWh project to be constructed on Altech’s land in Germany. Shares closed 31.25 per cent higher at 10.5 cents.
IVE Group (ASX:IGL) today announced that it has completed the acquisition of substantially all of the printing and finishing assets of Ovato for a net purchase consideration of $16m. The net purchase consideration was funded from existing facilities. Integration and associated capital expenditure costs of approximately $22m are expected to be incurred progressively over an 18-month integration period. Commenting on acquisition, IVE CEO Matt Aitken said: “IVE has a strong track record of successfully integrating businesses and optimising operating leverage to deliver synergies. When fully integrated, the Ovato acquisition is expected to generate meaningful shareholder value, and today results in IVE becoming the only large scale heat set web offset print producer in Australia.” Shares closed 7.46 per cent higher at $2.45.
Global semiconductor developer BluGlass (ASX:BLG) has joined the University of California, Santa Barbara’s Solid-State Lighting & Energy Electronics Centre (SSLEEC) consortium. The SSLEEC is an invitation-only collaboration between industry leaders and the University of California, Santa Barbara’s gallium nitride researchers, including blue-LED inventor and Nobel Laureate, Professor Shuji Nakamura, and industry luminary Professor Steven DenBaars. The consortium focuses on the development of new semiconductor technologies for energy-efficient lighting, disinfection, advanced mobile displays, augmented and virtual reality, communication, and power electronics. It is one of the most successful business models between universities and industry partners in the sector, producing more than 150 patents over the past six years. Consortium membership provides BluGlass with access to UCSB’s world-class faculty, facilities, and specialist GaN researchers, which will be invaluable in accelerating product development roadmaps for its novel blue and green laser diodes. Professor Shuji Nakamura said: “We are thrilled to be working with BluGlass, the world leader in RPCVD technology. I believe that RPCVD technology has huge advantages for the next generation of GaN advanced semiconductor devices.” Shares closed flat at 3 cents.
Commodities and the dollar
Gold is trading at US$1701.69 an ounce.
Iron ore is 2.3 per cent higher at US$104.25 a tonne.
Iron ore futures are pointing to a fall of 1.3 per cent.
Light crude is trading $0.26 lower at US$85.99 a barrel.
One Australian dollar is buying 67.21 US cents.
