by Paul Sanger
Australian shares posted solid gains, after Wall Street recovered from its two-day losing streak as investors wait to see how aggressively the US Federal Reserve will lift interest rates this week.
At the closing bell, the S&P/ASX 200 was 1.29 per cent or 86.50 points higher at 6806.40.
Futures
The Dow Jones futures are pointing to a rise of 57 points.
The S&P 500 futures are pointing to a rise of 8 points.
The Nasdaq futures are pointing to a rise of 24.50 points.
The SPI futures are pointing to a rise of 91 points when the market next opens.
Best and worst performers
The best-performing sector was Materials, up 2.67 per cent. The worst-performing sector was Real Estate Investment Trusts, down 0.53 per cent.
The best-performing stock in the S&P/ASX 200 was New Hope Corporation (ASX:NHC), closing 8.79 per cent higher at $5.94. It was followed by shares in Brickworks (ASX:BKW) and Mineral Resources (ASX:MIN).
The worst-performing stock in the S&P/ASX 200 was Abacus Property Group (ASX:ABP), closing 2.21 per cent lower at $2.65. It was followed by shares in Telix Pharmaceuticals (ASX:TLX) and AMP (ASX:AMP).
Australia
In economic news, the Reserve Bank has released the minutes of its September meeting, which confirm it is poised to raise interest rates again as it battles to contain red-hot inflation. However, the bank also said it sees a case for slowing the pace of hikes as rates approached more normal levels. The RBA said its monetary policy was not on a pre-set path and would be balanced to try and keep the economy on an even keel.
“All else equal, members saw the case for a slower pace of increase in interest rates as becoming stronger as the level of the cash rate rises,” the RBA minutes showed.
Asian markets
Shares in the Asia-Pacific have risen as Japan’s inflation accelerated and China kept its loan prime rate on hold. Investors are also looking ahead to the Federal Reserve meeting in the US.
Hong Kong’s Hang Seng index has gained 1.33 per cent and the Hang Seng tech index is up 2.54 per cent.
The Shanghai Composite in mainland China has risen 0.46 per cent and the Shenzhen Component has advanced 0.87 per cent.
Japan’s Nikkei 225 has risen 0.45 per cent on its return to trade after a holiday and the Topix has gained 0.5 per cent.
The Kospi in South Korea has added 0.49 per cent, while the Kosdaq is 0.97 per cent higher. MSCI’s broadest index of Asia-Pacific shares has gained 1.13 per cent.
Core inflation in Japan increased 2.8 per cent from a year ago, the fastest rate of increase since late 2014. China’s loan prime rate was left unchanged Tuesday, in line with predictions in a Reuters poll.
Singapore monetary authority chief signals central banks could be in battling mode for some time
Head of the Monetary Authority of Singapore (MAS) said the world faces four risks to global outlook and hinted that MAS, other central banks could be “firefighting” for some time. Ravi Menon named four risks as: how severe the economic downturn will be, trajectory of inflation in the medium term, impact of geopolitics on markets, and climate risk on portfolios. Said depth of downturn dependent on how high and persistent inflation will be, warned central banks may have no choice but to tighten more and for longer, and added medium-term inflation could be higher for longer. MAS expected by most analysts to hike rates again in October following four hikes in the past 12 months, including two surprise hikes. Said Singapore needed three pivots: from growth to sustained profitability, to south and southeast Asia, to private credit as new source for capital raising (Bloomberg).
Overseas investors withdrew funds from emerging Asia equities for the fourth consecutive week
Through to 16 September, pushing several regional currencies to historical lows and strengthening headwinds for stocks, according to Bloomberg data. YTD, outflows now $64B, equal to the whole of 2021. Cited analyst saying recession risks, monetary tightening in developed economies having unprecedented impact on Asia earnings expectations and EM flows. Tech-exposed South Korea and Taiwan equities hit hardest but India and Indonesia saw outflow reversed, stocks subsequently outperformed. Analyst warned until Fed shows clarity on rate direction, regional markets are still exposed to more outflow; added despite better forex management, negative correlation between dollar and EM stocks now more pronounced. Related, Reuters reported last week IIF data showed $7.7B of outflow from China’s debt markets in August, seventh consecutive monthly outflow; YTD outflow for first time since 2018 despite overall EM debt markets showing recovery signs.
Company news
RareX (ASX: REE) today reported significant new results received from diamond and reverse circulation drilling being undertaken as part of the 2022 growth drilling program at its 100 per cent-owned Cummins Range Rare Earths and Phosphate Project in the Kimberley region of Western Australia. RareX Managing Director, Jeremy Robinson, said the initial assay results from deeper drilling had further increased the scale of the Cummins Range deposit and confirmed the presence of a very large mineral system: “Our deeper drilling has shown that carbonatite pipes are very large mineralising systems capable of hosting millions of tonnes of rare earth oxides and top-quality rock phosphate. We look forward to releasing further results from diamond holes to the south-east, closer to the centre of the system. The phosphate mineralisation on the Phos Dyke is shaping up to be a very large body of phoscorite, with the rare earths-rich carbonatite veins reported in this release and in our last announcement proving to be an added bonus.” Shares closed 1.54 per cent higher at 6.6 cents.
Ragusa Minerals (ASX:RAS) has received notification from the Northern Territory’s Mineral Titles office that the company’s 100 per cent owned tenement EL33150 has been granted. Part of the NT Lithium Project EL33150 was granted on 16 September 2022 for a period of 6 years. The company identified the highly prospective tenement (and associated project area), as prospective for lithium from historical geological mapping works and the interpreted continuation of the geological rock-types found in the neighbouring lithium projects, indicating a high level of lithium prospectivity throughout the region. Ragusa Chair, Jerko Zuvela, said: “The Company’s strategic and highly prospective NT Lithium Project — with high grade historical and confirmatory lithium sample results, approved MMP for drilling commencing soon, and now contains five granted tenements. This is another very positive milestone that puts Ragusa in a strong position to rapidly accelerate the development of our project within a proven high-quality lithium district. We have a significant opportunity to utilise our exploration and development experience to rapidly progress our NT Lithium Project and realise the massive upside value potential in a Tier 1 jurisdiction close to major infrastructure at a time of record lithium prices.” Shares closed 10.2 per cent higher at 27 cents
ABx Group (ASX:ABX) has provided assay results which confirm a 6.5km mineralised channel connecting the company’s Deep Leads and Rubble Mound rare earth discoveries, located in northern Tasmania. The clay-hosted rare earth elements occur within a shallow channel structure that increases the prospect size by 27 per cent to 5.1 km2 and demonstrates the potential for the mineralised zone to deliver thick intersections as well as expand significantly along strike. Commenting on the discovery, ABx Group MD and CEO Dr Mark Cooksey said: “Our latest results represent a milestone moment in our development of the rare earth channel at Deep Leads and Rubble Mound. The extensive channel structure has connected and combined the two discoveries into a single deposit and, excitingly, the mineralisation has also been shown to return results which are thick — exceeding 20m thickness — and near surface. Shares closed 9.7 per cent higher at 17 cents.
AML3D (ASX:AL3) has announced the company is continuing to develop its strategically important relationship with the Boeing Company (NYSE:BA) by agreeing to an expanded scope for the supply of 3D printed components. The Boeing company develops, manufactures and services commercial aeroplanes, defence products and space systems for customers in more than 150 countries. Boeing has updated the scope of the July 2022 purchase contract to include the next phase of Aluminium test parts in the form of prototype components. This has significantly increased the value of the July contract by an additional 150 per cent. AML3D Managing Director, Andrew Sales, commented: “AML3D has already demonstrated to Boeing that our proprietary WAM® 3D metal printing technology produces high quality parts on time and to specification. The expanded purchase contract is strategically important as it moves AML3D towards being embedded into Boeing’s supply chain, which aligns with the delivery of our growth targets for the Aerospace sector.” Shares closed 19 per cent higher at 10 cents.
Commodities and the dollar
Gold is trading at US$1672.36 an ounce.
Iron ore is 0.8 per cent lower at US$97.70 a tonne.
Iron ore futures are pointing to a fall of 0.7 per cent.
Light crude is trading $0.16 higher at US$85.52 a barrel.
One Australian dollar is buying 67.15 US cents.
