by Lauren Hayes
At noon, the S&P/ASX 200 is 0.16 per cent or 11.50 points higher at 7,187.00.
Materials is the best performing sector, by far, followed by Information Technology and Energy.
The Australian dollar has been boosted by a weaker US dollar and stronger commodity prices. The iron ore futures have risen to near US$110 a tonne, whilst gold futures also saw increases.
The SPI futures are pointing to a rise of 10 points.
Best and worst performers
The best-performing sector is S&P/ASX 200 Materials, up 1.16 per cent. The worst-performing sector is S&P/ASX 200 Utilities, down 0.61 per cent.
The best-performing large cap is Fortescue Metals Group (ASX:FMG), trading 2.86 per cent higher at $21.395. It is followed by shares in Rio Tinto Group (ASX:RIO) and South32 (ASX:S32).
The worst-performing large cap is Macquarie Group (ASX:MQG), trading 2.62 per cent lower at $166.65. It is followed by shares in Allkem (ASX:AKE) and TPG Telecom (ASX:TPG).
Asian news
Shares in the Asia-Pacific have risen in early trade ahead of China inflation data for November.
Japan’s Nikkei 225 has risen 0.93 per cent, while the Topix has added 0.94 per cent.
The Kospi in South Korea has gained 0.28 per cent while the Kosdaq has climbed 0.67 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan have risen 0.2 per cent.
China is expected to release its inflation data. Economists polled by Reuters estimate consumer inflation rose 1.6 per cent compared with a year ago, while producer prices fell 1.4 per cent.
Looking for some bright spots
Despite the Thursday bounce, stocks are still down for the week with concerns of growth one of the more popular excuses. However, it is not all bad news this week. There have been several positive developments on the inflation front with the focus on falling used-car prices (CNBC), and housing costs (WSJ), easing supply chain constraints (FT), the downward revision to Q3 unit labour costs and a big pullback in energy prices. While a lot of the headlines out of the Goldman Sachs Financial Services Conference have been on the recession messaging for 2023, the firm has also highlighted healthy credit quality and pointed out that several banks sounded upbeat on near-term loan growth trends. Corporate commentary on travel demand has remained upbeat, while companies from a number of different industries have talked up supply chain improvements. In addition, this week has delivered further another major Covid restriction loosening announcement out of China, along with a heightened focus on growth out of the latest Politburo meeting.
Growth fears pick up as market waits for CPI and Fed
Market still has PPI and Michigan inflation expectations to get through on Friday, while the bigger issue is CPI next Tuesday and the Fed rate decision next Wednesday. Risk off has been the theme thus far for December despite favourable seasonality. It’s the first December since 2011 in which the S&P has declined in each of the first five sessions. Growth fears have been flagged even in the face of key macro surprises (payrolls and ISM services). The market seems to be concerned the Fed focused on lagging indicators and risking a policy mistake. Such concerns are best evidenced by deep curve inversion, sharp decline in excess liquidity and a pickup in disinflationary signals. Some of the focus this week has also been on the pullback in oil and the broader commodity complex. In addition, the consumer resilience theme has come under a bit of scrutiny with some of the cherry-picking of bank executive commentary at the Goldman conference, including estimates pandemic savings will run out in mid-2023. Earnings are another big overhang on sentiment as strategists’ 2023 commentary continues to highlight downside risk.
Company news
Codrus (ASX:CDR) have announced that outstanding grades support potential for high-grade permanent magnet REE’s at a recently secured project. The pegmatite system hosts significant kneeobeum, a critical metal used in the steel industry with applications including wind turbines and high-performance batteries. Shares are trading 70 per cent higher to 21 cents.
PhosCo (ASX:PHO) announced the results of a Scoping Study for the development of a potential large-scale, world-class mining operation at its Phosphate Project. PhosCo Executive Director, Taz Aldaoud commented: “The robust project economics confirm the potential to generate excellent financial returns over a long mine life of 46 years.These results confirm that the Chaketma Phosphate project truly is world class.” Shares are trading up 8 per cent to 14 cents.
In the latest news about Warrego (ASX:WGO) the company has now been advised that Beach energy does not want to match the revised Hancock takeover bid. This comes after earlier announcements that Hancock Energy had increased the offer price under its takeover bid for Warrego from $0.23 per share to $0.28 per share and that Warrego had then commenced the matching rights process in the Scheme Implementation Deed with Beach Energy, under which Beach had 5 business days to match the revised Hancock Takeover Offer. Shares are trading down 1.6 per cent at 30 cents. Beach Energy (ASX:BPT) is trading up 2 per cent to $1.68.
Commodities and the dollar
Gold is trading at US$1782.70 an ounce.
Iron ore is 3 per cent higher at US$110.70 a tonne.
Iron ore futures are pointing to a 3.85 per cent rise.
One Australian dollar is buying 67.69 US cents.
