by Lauren Hayes
The Australian market has followed Wall Street’s negative lead overnight after US markets sold off on fears that the Fed will keep increasing interest rates. Also weighing on market sentiment is today’s RBA rate decision at 2.30pm (AEDT), with consensus expecting the Central Bank to tighten by 25 basis points, which would take the cash rate to 3.1 per cent. At noon, the S&P/ASX 200 is 0.17 per cent lower at 7,312.8 points.
The SPI futures are pointing to a fall of 22 points.
In crypto news, Australian crypto exchange Swytfx announced it laid off 35 per cent of its staff.
Best and worst performers
The best-performing sector is Telco Services, up 0.41 per cent. The worst-performing sector is Information Technology, down 1.27 per cent.
The best-performing large cap is Yancoal Australia (ASX:YAL), trading 3.64 per cent higher at $5.55. It is followed by shares in Orica (ASX:ORI) and Whitehaven Coal (ASX:WHC).
The worst-performing large cap is IGO (ASX:IGO), trading 3.47 per cent lower at $15.01. It is followed by shares in ResMed (ASX:RMD) and Xero (ASX:XRO).
Asian news
Shares in the Asia-Pacific have so far fallen in early trade. The Nikkei 225 in Japan has shed 0.23 per cent and the Topix has lost 0.24 per cent. South Korea’s Kospi has dropped around 1 per cent and the Kosdaq is 1.21 per cent lower. The MSCI’s broadest index of Asia-Pacific shares outside Japan is down 0.45 per cent.
Rates seeing upward pressure
Interest rates are seeing some upward pressure today after reversing a selloff on Friday that followed the stronger November employment report. The rate backup seems to be weighing on equity sentiment following last week’s upside. While nothing is particularly incremental, Nick Timiraos’ article in the WSJ discussed the 2023 terminal rate and higher-for-longer messaging risk surrounding the Federal Reserve. It highlighted the Fed’s concerns about the tight labour market and its impact on wages. On the economic calendar today, ISM services surprised to the upside in November with only a slight relief in the prices paid component. This follows a softer ISM manufacturing report last week. Also, China’s reopening momentum has inflationary implications, even when considering some likely support for the easing supply chain constraint narrative. Supply may be another issue with IG borrowers expected to bring $10-$15B of new offerings this week (Bloomberg).
Employment report a complication but some other things to consider
The takeaways from stronger November payrolls and wage growth are initially bearish, particularly in the wake of an outsized rally on Wednesday. However, there has been good news on the inflation front as of late with the prices paid index in the ISM manufacturing report falling to a new cycle low of 43, a level that MKM Partners (Michael Darda) noted is consistent with sub-2 per cent PCE inflation. In addition, gasoline prices are falling fast, touching levels not seen since before Russia’s invasion of Ukraine (Washington Post), while apartment rents fell for a third straight month in November, falling by the most in at least five years (Bloomberg). When it comes to the labour market, there seem to be a lot of moving pieces. No shortage of headlines about tech/white-collar layoffs. Also, there is some scepticism about the spillover effects given structural tailwinds for the labour market. While stocks want to see slower jobs growth, the labour market resilience also cushions against the hard-landing and earnings risk themes flagged as the next drivers of equity weakness.
Company news
Immutep (ASX:IMM; NASDAQ:IMMP), a clinical-stage biotechnology company developing novel LAG-3 immunotherapies for cancer and autoimmune disease, announced today that a GMP compliant manufacturing process has been established for IMP761, its proprietary preclinical candidate for autoimmune diseases. The 200L scale attained by Northway Biotech, an end-to-end biopharmaceutical contract development and manufacturing organisation (CDMO), will ensure supply of IMP761 for IND-enabling studies and ensuing clinical trials. Immutep CEO Marc Voigt said: “We are pleased to have a GMP manufacturing process for IMP761 in hand with our manufacturing partner Northway Biotech as we move towards initiating IND-enabling studies in the first half of 2023 and subsequent clinical development.” Shares are trading 2.7 per cent lower at 36 cents.
Sarytogan Graphite (ASX:SGA) has announced a 99.87 per cent graphite purity from their deposit in Central Kazakhstan. This figure was achieved through combining both alkaline roasting and chemical purification. In response, Sarytogan Managing Director, Sean Gregory commented: “Sarytogan is thrilled with this breakthrough metallurgical result by our German laboratory partner Pro-Graphite. The graphite purities achieved are a significant step towards battery anode specification.” Shares are trading 29.5 per cent higher at 40 cents.
Eastern Resources (ASX:EFE) has announced that spodumene has been identified in drill samples at the Trigg Hill Project, by multiple methods including logging, XRD scans and fluorescence. Executive Director Myles Fang commented: “We look forward to the assay results from our phase 1 drill samples. In the meantime our phase 2 drill program is underway to accelerate exploration at Trigg Hill.” Shares are trading 6 per cent higher at 4 cents.
Ragusa Minerals (ASX:RAS) has announced that their first round of drilling has intercepted high-grade rare earth oxide mineralisation. In response, Ragusa Chair, Jerko Zuvela said: “This is a positive result for the potential multi-commodity development of our Project – with upcoming ASX laboratory analysis results used to delineate a JORC mineral resource.” Shares are trading 17 per cent higher at 17 cents.
Commodities and the dollar
Gold is trading at US$1782.70 an ounce.
Iron ore is 2.1 per cent higher at US$109.60 a tonne.
Iron ore futures are pointing to a 1 per cent fall.
One Australian dollar is buying 67.15 US cents.
