by Peter Milios
The Consumer Price Index (CPI) indicator is 6.9 per cent higher, 0.4 per cent lower than the September figure.
“Annually, prices for fruit and vegetables rose by 9.4 per cent in October, down from 17.4 per cent in September,” Michelle Marquardt, ABS Head of Prices Statistics, stated.
Whilst the figure shows a decline, it is important to note that CPI inflation still remains quite high.
As a result, at noon, the S&P/ASX 200 is 0.24 per cent or 17.70 points higher at 7271.00.
In addition, the Newcastle coal futures have increased by 2.6 per cent to US$390 per tonne, due to the fact that there are elevated fears there will be an even greater shortage of natural gas resulting from Russia’s invasion of Ukraine and a surge in thermal coal imports from India.
Whitehaven Coal (ASX:WHC) is up 7.45 per cent, whilst TerraCom (ASX:TER) and New Hope (ASX:NHC) are both up 4.49 per cent.
The SPI futures are pointing to a rise of 11 points.
Best and worst performers
The best-performing sector is Materials, up 1.30 per cent. The worst-performing sector is Health Care, down 0.76 per cent.
The best-performing stock in the S&P/ASX 200 is Whitehaven Coal (ASX:WHC), trading 6.59 per cent higher at $9.87. It is followed by shares in Sayona Mining (ASX:SYA) and Mineral Resources (ASX:MIN).
The worst-performing stock in the S&P/ASX 200 is Nanosonics (ASX:NAN), trading 3.28 per cent lower at $4.72. It is followed by shares in Collins Foods (ASX:CKF) and Pinnacle Investment Management Group (ASX:PNI).
Asian news
Asia-Pacific shares were mixed on Wednesday ahead of the release of data on China’s November factory activity, in which analysts are expecting to see a contraction for the second time in a row.
The Nikkei 225 in Japan has fallen 0.42 per cent and Topix has slipped 0.41 per cent.
South Korea’s Kospi has reversed losses to rise 0.45 per cent. The MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed.
Japan’s Fast Retailing and electric-vehicle maker Xpeng are set to report earnings, and Fed Chair Jerome Powell will be delivering a speech at the Brookings Institution on Wednesday.
Waiting game
A few moving pieces today but also pretty quiet ahead of Powell tomorrow (along with Eurozone CPI, ADP payrolls and JOLTS), ISM manufacturing (and PCE inflation) on Thursday and nonfarm payrolls on Friday. Thin liquidity is also a function of the World Cup. Big China rally on better Covid sentiment and cooler flash November data out of Europe some early areas of focus. However, Treasuries failed to sustain early gains and yields ultimately higher. Some attention on the uptick in inflation expectations in the Conference Board consumer confidence report. In addition, oil extended Monday’s move higher amid noisy OPEC+ production headlines. Also continued discussion about the more hawkish takeaways from Monday’s Fedspeak. Afternoon sluggishness partly attributed to latest speculation about iPhone production shortfalls in China. Apple drove broader tech underperformance with growth software, another laggard.
November consumer confidence a bit better, though inflation expectations ticked higher
November Consumer Confidence reading came in at 100.2, below October’s 102.2 (revised down from 102.5) but a touch better than consensus for 99.9. Declines seen in both present situations (to 137.4 from prior 138.7) and expectations (to 75.4 from 77.9) components. Release noted inflation expectations increased to their highest level since July, with big-ticket purchase intentions cooling alongside, and added weak expectations component suggests the likelihood of a recession remains elevated. Labour-market differential (respondents saying jobs are plentiful vs hard to get) widened a bit this month but remained near its lowest point since April 2021. Added six-month expectations for the labour market were more downbeat. Elsewhere, September Case-Shiller home price index fell 1.2 per cent m/m, largely in line with (1.1 per cent) consensus and August’s 1.3 per cent decline. Still up 10.4 per cent y/y, though release noted prices declined in all 20 cities tracked during September. FHFA’s September house price index up 0.1 per cent m/m with release highlighting widespread price deceleration.
Powell pushback questions
Fed Chair Powell speaks tomorrow at 13:30 ET at the Brookings Institute. The discussion will revolve around the economic outlook and the labour market. The big question seems to be whether and how much Powell wants to push back against the recent loosening of financial conditions that has come with the recent batch of cooler inflation data. Powell used his Jackson Hole speech in late August to aggressively push back against the ~80 bp of easing in the Goldman Sachs US Financial Conditions Index seen during a summer rally in stocks. That rally was partly driven by some traction behind the peak inflation narrative that the market viewed as supportive for a 2023 Fed pivot. The pivot narrative has not gone away though Eurodollar futures are currently only pricing in ~15 bp worth of rate cuts in 2H23, down from ~50 bp recently and over 80 bp in the summer. In addition, Fedspeak has been unrelenting in its higher-for-longer messaging and multiple officials have discussed a ~5 per cent funds rate as a likely jump-off point, in line with current market terminal rate pricing.
Company news
New Age Exploration (ASX NAE) has announced that it has received preliminary results from its recently completed first phase of Ultrafine geochemical soil surveys, completed over several selected high priority areas of the Company’s extensive Central Pilbara Gold-Lithium Project in Western Australia. Results from Phase 1 Ultrafine Soil Geochemistry sampling reveal multiple extensive areas of exceptionally strong, coherent lithium anomalism. In response, NAE Executive Director, Joshua Wellisch commented: “The very strong results at both Bullock Well and Quartz Hill clearly demonstrate the exceptional potential our Project area has to host significant high grade, hard rock lithium mineralisation.” Shares are currently trading 42.86 per cent higher at $0.01.
Voltaic Strategic Resources (ASX:VSR) has provided an update on its Ti Tree project, located in the Gascoyne region of Western Australia. Following the prior identification of a 22 km cumulative strike length prospective lithium-caesium-tantalum (LCT) corridor, Voltaic is highly encouraged by further interpretative analysis of both hyperspectral ASTER and LANSAT satellite imagery that has generated several priority targets. Shares are currently trading 19.05 per cent higher at $0.025.
Helix Resources (ASX:HLX) has announced the discovery of a large untested DHEM anomaly in addition to the intersection of copper sulphide mineralisation from a bold drilling campaign at its Canbelego Joint Venture (JV) Project located in the Cobar region of NSW. The results highlighted above and described fully in the following “Technical Report” section, demonstrate drill hole CANDD015 has identified new, large-scale, conductive targets in an area not previously intersected by any drilling within the interpreted host shears to the Canbelego copper mineralisation. Commenting on these initial results, Helix Managing Director Mike Rosenstreich said, “these results potentially highlight a major new mineralised position – never seen before by local DHEM and never drilled before. The survey has lit up a major robust conductive target associated with mineralised structures which clearly persist with depth.” Shares are currently trading 16.67 per cent higher at $0.007.
Kogi Iron (ASX:KFE), to be renamed Macro Metals, is pleased to announce that it has entered into a binding option term sheet to acquire 100 per cent of the Salar Verde Lithium brine-clay project in Chile. The Salar Verde Project covers an area of approximately 289km2 in the southern part of the Salar de Llamara in Chile within the “Lithium Triangle”. In response, Non-Executive Chairman, Peter Huljich commented: “The Salar Verde Lithium Project represents an exciting opportunity for the company in terms of diversification of commodity exposure into an integral part of the electrical storage market.” Shares are currently trading 40 per cent higher at $0.007.
Pure Resources (ASX:PR1) has secured 160 km2 of claims situated 65 km northeast of Patriot Battery Metals Inc. Corvette discovery, in the Superior Province, Quebec, Canada. Pure’s Executive Chairman, Patric Glovac, commented: ““This a genuine opportunity to discover a significant lithium deposit in a Tier-1 jurisdiction and we’re excited to kick-off exploration with aerial reconnaissance mapping and sampling to be undertaken in the coming weeks.” Shares are currently trading 17.02 per cent higher at $0.275.
Kinetiko Energy (ASX:KKO) an Australian gas explorer and developer focused on advanced shallow conventional gas and coal bed methane in South Africa, is pleased to provide the following update on its onshore gas exploration and production development activities. Drilling of core hole 270-06C has intersected strong gassy zones in targeted carbonaceous geology extending the potential contiguous gassy sandstone geology by approximately 30 km South. In response, Kinetiko CEO, Nick de Blocq, commented, “The desorption testing on the Majuba samples is now upwards of 11m3/ton and increasing, a very rewarding result from a strategically placed core hole.” Shares are currently trading 4.55 per cent higher at $0.115.
Commodities and the dollar
Gold is trading at US$1751.49 an ounce.
Iron ore is 2.4 per cent higher at US$101.25 a tonne.
Iron ore futures are pointing to a fall of 0.2 per cent.
One Australian dollar is buying 66.89 US cents.
