by Lauren Hayes
Financials have been keeping the ASX in positive territory in today’s session, following improved sentiment for financial stocks after the Bank of Queensland (ASX:BOQ) yesterday announced better-than-expected Net Interest Margin performance. This has bolstered financial stocks and the broader market. At noon, the S&P/ASX 200 is 0.51 per cent or 34.10 points higher at 6681.60.
The SPI futures are pointing to a rise of 24 points.
Best and worst performers
The best-performing sector is Financials, up 2.35 per cent. The worst-performing sector is Real Estate Investment Trusts, down 1.30 per cent.
The best-performing stock in the S&P/ASX 200 is Qantas Airways (ASX:QAN), trading 11.51 per cent higher at $5.76 on the back of their trading update released to the market this morning. The announcement stated that strong travel demand is accelerating the group’s recovery from the COVID crisis, with “a big improvement in operational performance and an acceleration in financial performance.” It is followed by shares in Kelsian Group (ASX:KLS) and Westpac Banking Corporation (ASX:WBC).
The worst-performing stock in the S&P/ASX 200 is NIB Holdings (ASX:NHF), trading 8.46 per cent lower at $6.88. The fall comes after the announcement this morning that NIB have completed their $135 million institutional placement. It is followed by shares in Virgin Money UK (ASX:VUK) and Pilbara Minerals (ASX:PLS).
Asian markets
Shares in the Asia-Pacific are so far trading mixed this morning as investors await inflation data from the US due later stateside.
The Nikkei 225 in Japan was fractionally lower by 0.2 per cent and the Topix was down 0.3 per cent. Japan’s yen strengthened in Asia’s morning trade after touching 146.98 per US dollar. South Korea’s Kospi has so far shed 0.36 per cent and the Kosdaq has lost 0.92 per cent.
MSCI’s broadest index of Asia-Pacific shares is trading flat. Thailand’s market is closed for a holiday Thursday.
Headline September PPI hotter than forecast, though core reading in line
The Headline September Producer Price Index (PPI) was up 0.4 per cent month-on-month, hotter than consensus for a 0.1 per cent rise and August’s downwardly revised 0.2 per cent monthly decline (was down 0.1 per cent). Core PPI (ex food and energy) is up 0.3 per cent month-on-month, level with consensus and August’s downwardly revised reading (to 0.3 per cent month-on-month from previous 0.4 per cent rise). The release noted most of the upward pressure attributable to services, including traveller accommodations, food/alcohol retailing, vehicle wholesaling, and inpatient hospital care. Figures revealed a big jump in food prices as well. Data comes ahead of tomorrow’s much-anticipated September Consumer Price Index (CPI) report. The consensus is looking for a headline increase of 0.2 per cent, which would be an uptick from August’s 0.1 per cent pace. The core CPI revealed a rise of 0.4 per cent month-on-month against prior month’s 0.6 per cent. Previews suggest some upside risk given slower declines in energy prices, continued food inflation, and persistent pressure from shelter/healthcare prices (though also some possible impacts from softer retail prices amid elevated inventories and promotions).
All eyes on the UK (and the Fed)
UK developments continue to dominate the headlines. Some hope the Bank of England (BoE) could do another U-turn and extend the bond-buying program beyond Friday’s deadline, though it continues to signal a near-term exit. There is also some speculation the Truss government could further tweak its mini budget to placate market concerns. However, there are still worries UK monetary and fiscal authorities are on a collision course that risks further financial stress (and could be seen elsewhere as politicians feel pressured to respond to slower growth). The Fed rate hikes are still the overriding catalyst for tightening of global financial conditions. Officials have only briefly acknowledged the spillover effects and growth/recession risks, if at all (and Yellen seemingly blessed dollar strength in an interview with CNBC). Credibility debates are now heating up in both directions. While the Fed came under significant scrutiny for sticking too long with its transitory view of inflation and is still perceived by some as being behind the curve, it also worries about the impact of an aggressive rate-hike cycle on an increasingly financialised US and global economy.
Not a lot new from the September FOMC minutes
The September FOMC meeting (20-21 September) showed officials warning that the cost of taking too little action to bring down inflation likely outweighed the cost of taking too much action. However, officials also noted that risks would become more two-sided as policy moved into restrictive territory, reflecting the emergence of downside risk. Some also said that it would be important to calibrate the pace of further tightening to mitigate the risk of significant adverse effects on the economic outlook, though the FOMC still affirmed their strong commitment to the 2 per cent inflation objective, while also stressing the importance of staying the course even as the labour market slowed. The minutes did little to change the market outlook on the Fed policy rate path, with an ~80 per cent chance of a 75 basis points hike in November, unchanged from before the release, while the peak fed funds rate remains at 4.50-4.75 per cent by February 23 (also unchanged).
G7 cautious on volatility, but maintains FX policy stance
Statements from G7 finance and central bank leaders in Washington showed agreement to continue close monitoring of global markets given recent volatility. While recognising that many currencies have moved significantly this year with increased volatility, the statement reaffirmed FX commitments as elaborated in May 2017 (on market-determined exchange rates while cautioning that “excess volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability”). G7 central banks are strongly committed to achieving price stability and closely monitoring the impact of price pressures on inflation expectations and will continue to appropriately calibrate the pace of monetary policy tightening, while being mindful to limit the impact on economic activity and cross-country spillovers. The meeting underscored solidarity with Ukraine and denounced Russia for causing global economic disruption at a time when the global economy was only starting to recover from the pandemic. The statement reaffirmed support for Ukraine for as long as it takes.
Company news
North Stawell Minerals (ASX:NSM) have today announced the first of the follow up (Phase 2) air core drilling programs and has confirmed higher grade gold within the broad, gold-anomalous halo identified in previous, regional, AC programs. NSM’s first Phase 2 drilling (infill) has successfully upgraded a broad, low-grade gold anomaly identified beneath cover into a significant gold intercept for further appraisal. In response, North Stawell Minerals Chief Executive Russell Krause said, “The success highlights the efficacy of NSM’s exploration strategy which we continue to deploy with confidence upon other targets within our tenement package. Drilling recommences in November 2022”.
Voltaic Strategic Resources (ASX:VSR) provided an update this morning on its Gascoyne REE and Battery Metals Project located in WA. An ongoing review of historical data within the Company’s ‘Paddys Well’ has confirmed multiple REE occurrences within both historical drill core and surface rockchips. Voltaic’s CEO, Michael Walshe, commented, “The historical drill results are extremely encouraging for the REE prospectivity of the region. We have observed elevated REE values over several significant widths. Moreover, the mineralisation appears to have a high proportion of the in-demand ‘magnet’ REEs, which is encouraging for potential economic extraction in the future.”
Carnaby Resources (ASX:CNB) announced this morning further exceptional drilling results from the Mount Hope Prospect in Mt Isa, Queensland. The Company’s Managing Director, Rob Watkins commented “The outstanding result of copper is the widest and highest grade drill result yet recorded throughout the Greater Duchess Project, even surpassing the original discovery hole. These exceptional drill results from Mount Hope are pointing towards a very material and growing discovery. With numerous IP anomalies, structural targets and obvious direct extension drill targets to the results announced today, we look forward with great anticipation to the unfolding discovery at Mount Hope”.
Valor Resources (ASX:VAL) announced exceptional Uranium and Copper rock chip results at Surprise Creek. The findings found up to 6.13 per cent uranium and 61.7 per cent copper. In response, Valor Executive Chairman stated, “We are seeing two potential target types emerge – one primarily for uranium with associated copper in the northern part of the project and another in the south and central part of the project comprising just copper”.
INOVIQ (ASX:IIQ) announced that it has signed a contract research agreement with Nicoya Lifesciences Inc to transfer, develop and evaluate a prototype SubB2M-based test on the next-generation Alto digital SPR instrument. In response, Nicoya CEO and Founder Ryan Denomme stated, “while Alto is a critical tool in drug development with its unprecedented sample throughout and automation capabilities, it’s also broadly applicable in many other impactful areas of disease research that align with our mission to improve human life.”
Commodities and the dollar
Gold is trading at US$1675.56 an ounce.
Iron ore is 0.6 per cent lower at US$96.50 a tonne.
Iron ore futures are pointing to a rise of 0.35 per cent.
One Australian dollar is buying 62.90 US cents.
