by Peter Milios
The ASX opened slightly higher on gains from the US overnight. US markets finished higher as investors liked the idea of a divided government, because it will result in reduced government spending, new taxes and more regulations.
Materials is the stand out of the day so far, up 2.12 per cent and up 0.77 per cent from the next best performing sector, Real Estate.
SSR Mining (ASX:SSR), Rio Tinto (ASX:RIO), and Newcrest Mining (ASX:NCM) are up 8.89 per cent, 2.06 per cent and 6.61 per cent respectively.
In other news, coal giant Whitehaven has mentioned that La Nina has hampered its production at its NSW mines, leading to a lower projected output expectations, amidst the possibility of poor weather conditions in the future. Whitehaven is trading 9.3 per cent lower at $8.54.
Best and worst performers
The best-performing sector is Materials, up 2.34 per cent. The worst-performing sector is Information Technology, down 0.79 per cent.
The best-performing stock in the S&P/ASX 200 is St Barbara (ASX:SBM), trading 10.00 per cent higher at $0.55. It is followed by shares in Regis Resources (ASX:RRL) and Capricorn Metals (ASX:CMM).
The worst-performing stock in the S&P/ASX 200 is Whitehaven Coal (ASX:WHC), trading 7.76 per cent lower at $8.68. It is followed by shares in News Corporation (ASX:NWS) and CSR (ASX:CSR).
Asian news
Asia-Pacific stocks have risen as investors await the results of the United States midterm elections and a slew of economic data is expected, including China’s inflation data.
The Nikkei 225 in Japan has lost 0.19 per cent so far and the Topix is 0.24 per cent lower, while the Kospi in South Korea has gained 0.68 per cent so far.
The Hang Seng index in Hong Kong was about flat in the first hour of trade. In mainland China, the Shanghai Composite is fractionally lower while the Shenzhen Component is marginally higher.
Midterm tailwind
There is some discussion about the midterm elections as a potential tailwind for stocks. Jefferies has noted that when looking back at the 22 instances since 1934, the performance tends, interestingly, to be quite positive. In addition, the performance tends to be a boost if YTD performance into the midterms is below the average. Goldman Sachs also noted that, during the last 90 years, the S&P 500 has generated a median return of 3 per cent through year-end and 17 per cent during the 12 months following the midterm elections. Also, returns have generally been slightly stronger under divided governments, over when one party has unified control. The Bank of America also discussed how a split government under a Democratic president has the best set-up for equities, with average annual returns of +16 per cent. At the same time, some commentators think midterms may not be much of a directional driver with the outsized focus on the Fed.
Ukraine updates continue to trend positive
Recent press reports continue to suggest some movement of talks between Ukraine and Russia. A WSJ report today said Ukrainian President Zelensky said he was open to negotiations with Russia, as long as they focus on safeguarding Ukraine’s territorial integrity, compensating Kyiv, and bringing war criminals to justice. The update comes after a recent Washington Post report said that the White House is privately encouraging Ukrainian leaders to signal an openness to negotiating with Russia and to drop refusal to engage unless Russian President Putin is removed from power. WSJ also reported that the national security adviser, Jake Sullivan, has been in confidential conversations with Putin, which helps to reduce the risk of a broader conflict. More reports have also stated that EU and US allies in NATO have identified a short-term negotiation window if Ukraine can push for a ceasefire from a position of strength. From a market perspective, any steps toward peace settlement could help ease broader geopolitical overhang, and could help bring down global inflationary/recessionary risk, particularly given energy disruptions.
Company news
ReNu Energy (ASX:RNE) and its wholly owned subsidiary Countrywide Hydrogen Pty Ltd (Countrywide) have announced they have agreed to a non-binding Term Sheet for the investment of up to $100 million in ReNu Energy’s Green Hydrogen Projects with Australian superannuation fund HESTA. HESTA will be provided a first right of refusal to invest in existing and new Green Hydrogen Projects. The parties may otherwise agree to add additional investors to the Green Hydrogen Projects. In response to the news, ReNu Energy Chairman Boyd White said, “HESTA is highly respected for its commitment to sustainability and responsible investments. With HESTA’s support we look forward to delivering green hydrogen and contributing to a low carbon future.” RNE is trading 132.5 per cent higher at $0.093 at noon.
Aeon Metals (ASX:AML) have announced that it has returned exceptional results at its Walford Creek Copper-Cobalt Project (Walford Creek Project) in north-west Queensland. Thirty-one exploration holes have been completed for over 11,700m of drilling in 2022. The results for the hole extend the Amy West high grade copper-cobalt footprint a further 90m east of the hole. In response, Aeon Managing Director and CEO, Dr Fred Hess, commented, “The drilling results announced today reinforce the potential for the Amy zone to host significantly higher grade and thicker PY3 mineralisation than that already identified at the well-drilled Vardy and Marley zones further to the east.” AML is trading 20.83 per cent higher at $0.029 at noon.
Infinity Lithium Corporation (ASX:INF), through its wholly owned subsidiary Extremadura New Energies, announced the execution of a binding MoU for a photovoltaic, methane and green hydrogen project aligned to the San José Lithium Project. San José has the potential to take advantage of the vast renewable energy opportunities in Extremadura and to benefit from reduced energy costs from the localised green energy project that can meet renewable electricity and green hydrogen requirements of the Project. Infinity Managing Director and CEO Ryan Parkin noted: “The partnership with Extremadura’s preeminent and progressive company further reinforces the positive momentum and complementary opportunities aligned to San José following the initiation of the permitting process last month.” INF is trading 7.14 per cent higher at $0.225 at noon.
Calidus Resources (ASX:CAI) announced that their recent drilling at Pirra Lithium’s Spear Hill project has confirmed lithium continuity 250m down dip. The program tested an exposed pegmatite that yielded rock-chip assays of 0.66 per cent–2.34 per cent of lithium peroxide and a second poorly exposed pegmatite to the north. In response, Calidus Managing Director Dave Reeves stated, “The drilling represents only a small portion of the outcropping lithium pegmatites, with another 3km of strike length of pegmatite untested.” CAI is trading 6.49 per cent higher at $0.41 at noon.
Copper producer Austral Resources Australia (ASX:AR1) announced its planned development and exploration program for the remainder of calendar 2022 and the 1st half of calendar 2023. Some highlights from the program state that drilling of prioritised phase 1 Anthill 2.0 copper oxide exploration targets within the existing ML are currently in progress and the drilling of phase 1 McLeod Hill and Lady Annie copper oxide exploration targets scheduled to be completed in 2022, both targets on existing ML’s. In response, Austral’s Managing Director and CEO, Dan Jauncey said: “We are thrilled we are now on track with our Anthill copper production with Mt Kelly processing facility hitting 1,000 tonne per month during this quarter. This enables our team to focus on the longer-term future of Austral, and extending our revenue potential through exploration.” RNE is trading 7.06 per cent higher at $0.182 at noon.
Commodities and the dollar
Gold is trading at US$1711.44 an ounce.
Iron ore is 1.3 per cent higher at US$89.05 a tonne.
Iron ore futures are pointing to a rise of 2.69 per cent.
One Australian dollar is buying 65.04 US cents.
