By Lauren Hayes
The ASX gave up modest gains in this morning’s trade to dip into the red at lunchtime trading.
At noon, the S&P/ASX 200 is 0.32 per cent or 20.70 points lower at 6,475.50.
The SPI futures are pointing to a fall of 37 points.
Best and worst performers
The best-performing sector is Energy, up 1.95 per cent. The worst-performing sector is Real Estate Investment Trusts, down 1.47 per cent.
The best-performing stock in the S&P/ASX 200 is Whitehaven Coal (ASX:WHC), trading 6.39 per cent higher at $8.99. It is followed by shares in Coronado Global Resources (ASX:CRN) and New Hope Corporation (ASX:NHC).
The worst-performing stock in the S&P/ASX 200 is Telix Pharmaceuticals (ASX:TLX), trading 15.77 per cent lower at $4.54. It is followed by shares in Core Lithium (ASX:CXO) and Centuria Capital Group (ASX:CNI).
Asian markets
Major indexes in the Asia-Pacific are trading down 2 per cent after the S&P 500 set a new 2022 low overnight on Wall Street. The offshore and onshore Chinese yuan reached their weakest levels since 2008.
Japan’s Nikkei 225 is trading over 2 per cent lower, while the Topix index has slipped 1.37 per cent.
Minutes from the Bank of Japan’s July meeting said a few policy board members see consumer inflation slowing in fiscal 2023 unless commodity prices continue to rise.
Hong Kong’s Hang Seng index is currently trading down 2 per cent. In mainland China, the Shanghai Composite is trading down 0.78 per cent with the Shenzhen Component down almost 1 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan has dipped 1.12 per cent. The Kospi in South Korea has shed 2.1 per cent.
China’s renewables growth boosts copper demand as traditional sectors falter
China’s rapid build-up of clean energy is claiming more copper, supporting the market at a time when traditional sources of demand like housing are in the dumps. Copper imports are one of the few bright spots in an otherwise bleak picture for Chinese commodities consumption. CRU Group forecasts that China’s copper demand will rise about 0.8 per cent this year to 15.55 million tonnes, with growth of more than 4 per cent from both autos and electricity transmission countering a 4 per cent decline in construction and a 2 per cent drop in consumer durables. The rapid growth in EV sales and the massive ramp up in renewable power are expected to make a relatively big contribution to copper demand.
China prepares to tweak yuan fixing process
Citing an unnamed source, Reuters reported Chinese monetary authorities are asking local banks to revive the counter-cyclical factor that was abandoned two years ago to help stem yuan declines. This adds to efforts that included firmer-than-expected mid-point fixings, verbal warnings, and holding off major monetary easing efforts. The People’s Bank of China (PBOC) also lowered banks’ FX reserve requirement ratio and reinstated risk-reserve requirements on currencies purchased through forwards. Bloomberg yesterday discussed growing expectations of more PBOC action as the yuan approaches a 14-year low 7.2 per dollar, flagging reintroduction of the counter-cyclical factor as a possibility. Other measures were also suggested, such as increasing the issuance of central bank bills in Hong Kong. However, HSBC has raised doubts about the effectiveness of such measures while policy divergence persists. Natixis SA said PBOC won’t defend the 7.2 level at all costs if all other currencies continue to weaken, though it would step in if the pace of depreciation accelerates in the run-up to the party congress.
US approves nationwide EV charger plans
The US Transportation Department has announced the approval of electric vehicle charging station plans for all 50 states, the District of Columbia and Puerto Rico.
The Department of Transportation had previously approved proposals from 35 states. It noted that, with today’s decision, $1.5 billion will be available in fiscal years 2022 and 2023 for charger installations covering some 75,000 miles.
The $1 trillion infrastructure bill approved by Congress last November included $5 billion to help states put the chargers in place.
Transportation Secretary Pete Buttigieg indicated the plans will help ensure that drivers in every part of the country can take advantage of owning an EV.
Gold signals more losses
The secular bull market in gold is on hold as the precious metal breaks to fresh two-year lows. Gold futures have been flirting with the lower bounds of a multi-year range for the better part of September. Last week, multi-year support gave way as bears took control, sending prices lower.
Based on gold’s stature as a leading indicator of inflation, the breakdown in gold does not bode well for other commodities and cyclical assets.
Downside follow-through in the shiny yellow metal could imply a deeper correction for the entire commodity sector.
China Beige Book warns of deflation risks amid property crisis
Bloomberg reported the Q3 China Beige Book survey indicated growing risks from deflation as demand falters amid the ongoing property crisis and Covid restrictions. Companies reported weakest growth in output prices since 4Q20 in contrast to a slight pickup in costs, with the bulk of deflationary pressure coming from the property industry. This outweighs price gains in retail and services as Covid lockdowns were lifted by the summer. CBBI cautioned that the risk of Covid relapse in winter could undo positive developments. Manufacturing profit margins and sales prices have deteriorated. Corporate borrowing activity continued to decline as a sign of PBOC support yet to have a significant impact. CBBI gauges measuring corporate loans slumped to the lowest level since data began in 2012, while corporate bond issuances tumbled to the worst since 2016.
Company news
Critical Resources (ASX:CRR) has announced assay results from the current diamond drilling campaign at the company’s 100 per cent-owned Mavis Lake Lithium Project. The assay results illustrate the continuity of high-grade lithium mineralisation within the main zone of Mavis Lake and present continued intercepts of extremely high-grade lithium oxide. Non-Executive Director Mr Alex Cheeseman said: “To follow our last results with another set of such high-grade assays is an excellent outcome for the Company, and further builds our confidence in delineating a JORC compliant resource in the near term. We believe the last few rounds of assay results have been some of the highest grades released by an ASX listed lithium company so far in 2022, this sets us up well to continue advancing the project and transition Critical Resources into a potential lithium project developer”. Shares are trading 4.4 per cent higher at 7 cents.
QX Resources (ASX:QXR) has announced the appointment of former Lake Resources (ASX:LKE) CEO Steve Promnitz to the new role of MD to facilitate the growth and development of the company’s lithium assets and gold projects. Executive Chairman Maurice Feilich said: “QXR’s board decided now is the right time to appoint a MD to fast track the development of these assets while also assessing new battery minerals projects that complement the portfolio”. Promnitz added: “I plan to advance the current assets and expand the focus on battery minerals by drawing on my extensive networks and skills from the past 6 years in the battery minerals sector”. Shares are trading 36.4 per cent higher at 5 cents.
Sabre Resources (ASX:SBR) today announced that the second diamond drill hole in the current program at Sherlock Bay has intersected a 15m sulphide zone including massive sulphide lenses and matrix sulphide breccia that correlates with the southwestern edge of the C3 massive sulphide conductor target. Sabre Resources CEO Jon Dugdale commented: “The intersection of massive sulphide lenses and matrix sulphide breccia at the southwestern end of the C3 Conductor indicates we are on the verge of a massive sulphide discovery at Sherlock Bay”. Shares are trading 20 per cent higher at 1 cent.
Asra Minerals (ASX:ASR) today reported early drilling across 93 holes at the company’s flagship Mount Stirling Project in Western Australia has returned significant REEs and critical minerals results at the company’s Wishbone and Yttria prospects. Drilling results confirm the widespread occurrence of REEs, nickel, cobalt and scandium in the regolith profile developed at Stirling by weathering of an underlying source intrusion. Asra Executive Chairman Mr Paul Summers said: “The Company’s REEs and critical minerals endowment is shaping up to be unique on an international scale. It’s becoming clearer that our rare earths and critical minerals at Mt Stirling are actually very rare in their unique occurrence. Our deposit should require minimal blasting and crushing”. Shares are trading 8 per cent higher at 3 cents.
American West Metals (ASX:AW1) today reported that initial assay results from drill hole ST22-10 have confirmed a significant discovery at the Storm Copper Project on Somerset Island, Canada. Dave O’Neill, Managing Director of American West Metals, commented: “I am very pleased to be able to report that initial assays from drill hole ST22-10 confirm the presence of sediment hosted type copper and zinc sulphide mineralisation, with huge implications for the potential metal endowment of the project”. Shares are trading 3.5 per cent higher at 15 cents.
INOVIQ (ASX:IIQ) has released its Annual Report for the 2022 financial year today. The company reported a total comprehensive loss for the year of $6.260m. The total loss reported increased to $18.225m due to an impairment charge recognised against goodwill and an increased impairment charge for the hTERT intangible asset. The Chairman and CEO noted: “During the period, we advanced our innovative exosome capture tools, precision diagnostic products and pipeline towards a number of key research, development and commercialisation milestones. These achievements were made despite the continuing challenges of the COVID-19 pandemic and volatile financial markets globally, particularly for biotech companies”. Shares are trading down 5.3 per cent to 54 cents.
Austco Healthcare (ASX:AHC) released its 2022 Annual Report this morning. Chairman Graeme Billings commented: “Despite another year of supply chain issues and continued, albeit fewer, restrictions on access to hospital and aged care sites, Austco was able to deliver a 15 per cent increase in customer revenues and report another year of profitability.
Higher customer revenues and maintaining our margins allowed Austco Healthcare to report a $2.3 million net profit after tax. Whilst this was lower than the previous year, when we exclude COVID related grant income, the underlying net profit after tax was up 14 per cent to $1.7 million”. Shares are trading unchanged at 12 cents.
Commodities and the dollar
Gold is trading at US$1625.21 an ounce.
Iron ore is 1.6 per cent higher at US$97.60 a tonne.
Iron ore futures are pointing to a fall of 0.1 per cent.
One Australian dollar is buying 64.15 US cents.
