by Paul Sanger
Australian shares have started the week sharply lower after global equity markets tumbled on Friday.
Concerns over global growth and a strengthening US dollar combined to heap pressure on both the energy sector and mining stocks.
The Financial Review noted that the Australian government has proposed to retrospectively stop companies paying fully franked dividends funded by capital raisings, backdating the policy to 2016. This is said to ensure that only dividends equivalent to realised profits can be franked. Still, the proposals are far more limited than the changes proposed by the Labor Party ahead of the 2019 election, which involved scrapping cash refunds for excess franking credits.
At the closing bell, the S&P/ASX 200 was 1.60 per cent or 105.30 points lower at 6469.40.
Futures
The Dow Jones futures are pointing to a fall of 160 points.
The S&P 500 futures are pointing to a fall of 25.75 points.
The Nasdaq futures are pointing to a fall of 82 points.
The SPI futures are pointing to a fall of 69 points when the market next opens.
Best and worst performers
The best-performing sector was Health Care, up 1.97 per cent. The worst-performing sector was Energy, down 6.30 per cent.
The best-performing stock in the S&P/ASX 200 was Nanosonics (ASX:NAN), closing 4.68 per cent higher at $3.58. It was followed by shares in Megaport (ASX:MP1) and REA Group (ASX:REA).
The worst-performing stock in the S&P/ASX 200 was New Hope Corporation (ASX:NHC), closing 14.69 per cent lower at $5.40. It was followed by shares in Costa Group Holdings (ASX:CGC) and Whitehaven Coal (ASX:WHC).
Asian markets
Shares in the Asia-Pacific have mostly fallen sharply on Monday as negative sentiment continues to weigh in on markets.
The Nikkei 225 in Japan has dropped 2.56 per cent, and the Topix has slipped 2.59 per cent. South Korea’s Kospi has tumbled 3.2 per cent and the Kosdaq has plunged more than 5 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan is 1.46 per cent lower.
Hong Kong’s Hang Seng Index has fallen 0.38 per cent, erasing earlier gains, with the Hang Seng Tech Index bucking the trend, rising by 1.79 per cent. In mainland China, the Shanghai Composite has fallen 0.2 per cent and the Shenzhen Component is up 0.647 per cent.
The Reserve Bank of India’s monetary policy committee is scheduled to meet later this week, and China is expected to release data on factory activity at the end of the week.
Kuroda recaps BOJ’s views on inflation and economic outlook
In a speech at a Business Leaders’ meeting, BOJ Governor Kuroda says the central bank will continue with monetary easing to support aggregate demand and encourage a virtuous cycle accompanied by wage increases. Attributes current inflation mostly to high commodity prices, but upward pressure from high costs is expected to gradually ease from early 2023 and CPI inflation is expected to decline below 2 per cent from FY23. Anticipates Japan’s economy to continue recovering based on improving exports, production, business investment and consumption, and the government moving to relax entry requirements. Highlights risks surrounding overseas economies, including from weak demand and cost-push inflation and threats to supply chains from future Covid-19 waves. No substantive mention of yen weakness in Kuroda’s speech.
Geopolitics
Financial Review noted Chinese Foreign Minister Wang Yi said Beijing is willing to cooperate with Australia to resolve their differences. Wang said China welcomed Australia’s reaffirmation of its “one-China policy” and that their relationship should become “more mature and stable.” However, Australian Foreign Minister Penny Wong was more circumspect, reiterating that the government wants China to lift its trade sanctions on Australian exports.
Company news
Arovella Therapeutics (ASX:ALA), a biotechnology company focused on developing its invariant Natural Killer T (iNKT) cell platform for cancer treatment, today announced a collaboration with Imugene (ASX:IMU), using the onCARlytics platform. This will test Arovella’s CAR19-iNKT cell therapy with Imugene’s onCARlytics platform to seek and destroy solid tumours. The read out from the preclinical studies performed through the collaboration is expected in H1 2023. Arovella’s CEO Dr Michael Baker commented, “We are excited to collaborate with Imugene to evaluate potential of our iNKT product in combination with their onCARlytics product for treatment of solid tumours. Imugene’s onCARlytics is one of the most promising products to be developed for solid tumours.” Shares closed 29.6 per cent higher at 3.5 cents.
Greenwing Resources (ASX:GW1) today announced a strategic funding transaction with NIO Inc that will enable Greenwing to accelerate its Argentinian lithium exploration program, aligning NIO as the company’s potential joint venture and offtake partner. NIO is a pioneer and a leading company in the premium smart electric vehicle market and is listed on the New York Stock Exchange. Under the deal arrangement, NIO has agreed to pay $12m to subscribe for Greenwing shares at a deemed issue price of $0.55 per share. Shares closed 65.31 per cent higher at 40.5 cents.
Sipa Resources (ASX:SRI) today advised that drill testing of lithium targets at its 100 per cent-owned Skeleton Rocks project is in progress . The commencement of drilling was delayed slightly by wet weather, but the program is now in full swing. Sipa Resources MD Pip Darvall said: “The focused geochemical halos we have identified at Skeleton Rocks are the logical place to commence drilling on a project that is well located in a proven WA lithium province. The program can be adapted as we progress based on results, and it is great to once again be out testing targets at another one of Sipa’s projects.” Shares closed 6.38 per cent higher at 5 cents
Commodities and the dollar
Gold is trading at US$1638.64 an ounce.
Iron ore is 0.9 per cent higher at US$99.60 a tonne.
Iron ore futures are pointing to a fall of 2.0 per cent.
Light crude is trading $0.95 lower at US$77.79 a barrel.
One Australian dollar is buying 64.95 US cents.
