by Peter Milios
So far, the energy sector is showing the strongest performance, driven by a surge in oil prices following Russia’s announcement to decrease its daily oil production by 500,000 barrels, due to Western sanctions and restrictions imposed on Moscow’s crude oil and oil products.
At noon, the S&P/ASX 200 is 0.1 per cent lower at 7,426.20.
The SPI futures are pointing to a fall of 8 points.
Star Entertainment Group (ASX:SGR) announced that their first-half earnings will be impacted by changes made following the Bell and Gotterson Reviews and increased competition with Crown in Sydney. The company is anticipating a non-cash impairment charge in the range of $400m to $1.6bn in their first-half results, related to their NSW business, due to proposed increases in the NSW casino duty rate.
Best and worst performers
The best-performing sector is Energy, up 2.01 per cent. The worst-performing sector is Consumer Discretionary, down 0.9 per cent.
The best-performing large cap is Insurance Australia Group (ASX:IAG), trading 5.1 per cent higher at $4.95. It is followed by shares in Yancoal Australia (ASX:YAL) and Whitehaven Coal (ASX:WHC).
The worst-performing large cap is Lynas Rare Earths (ASX:LYC), trading 7.4 per cent lower at $8.13. It is followed by shares in Aurizon Holdings (ASX:AZJ) and JB Hi-Fi (ASX:JBH).
Asian news
Stocks in Asia-Pacific were down on Monday as investors look ahead to a week of crucial economic data releases, including the U.S. consumer price index that will determine the Federal Reserve’s path forward. Japan’s Nikkei 225 fell 0.61 per cent and the Topix was down 0.14 per cent. In South Korea, the Kospi shed 0.5 per cent in its first hour of trade, while the Kosdaq fell 0.2 per cent.
Economy’s resilience sees markets price in higher peak Fed rate
Disinflation inflation narrative facing fresh uncertainty following recent US macro data (hotter-than-expected nonfarm payrolls, jump in consumer inflation expectations, and rising used car price prices). Developments prompting reassessment of Fed rate outlook with swaps markets pricing in terminal funds rate of ~5.20 per cent vs less than 5 per cent prior to January payrolls data (Bloomberg, FT). Markets now eyeing only one rate cut by year-end vs two previously. Some concern an unexpected acceleration in January inflation this week may prompt a more hawkish repricing of terminal funds rate. Come as Fed officials continue to push back against expectations of a dovish pivot in 2023, arguing more effort needed to tame inflation. Chair Powell last week also left the door open to raising rates by more than markets are pricing in if data comes in stronger than Fed has forecast.
Biden administration to target China companies over their links to spy balloon
US State Department announced it is adding six Chinese companies to export blacklist for their ties to PLA-backed spy balloon shot down last week (Bloomberg). Unclear how impactful designations will be and how closely the affected companies are linked to US exporters. US was expected to retaliate but President Biden said incident has not materially disrupted US-China relations. Tensions remain elevated on other fronts with Reuters reporting White House weighing outright bans on American firms from investing in some Chinese tech companies. Expected to unveil executive order in coming months. Comes after NY Times on Friday reported administration was considering measures to restrict American investment used to finance development of advanced technology in China. Treasury Department also reaching out to other governments and EU to ensure they do not provide similar financing to China.
Company news
PNX Metals (ASX:PNX) announced that multiple high-grade gold targets have been identified in their northern exploration leases. In response, PNX Managing Director James Fox said: “The high-grade gold in rock-chips being reported, and assessment of historic data, highlight the potential for further discovery of economically significant gold mineralisation within our existing exploration leases.” Shares are trading 16.7 per cent higher at 0.4 cents at noon.
Buru Energy (ASX:BRU) has announced that they will acquire Origin Energy’s Canning Basin Joint Venture interests. Commenting on the transaction, Chair of Buru Energy, Mr Eric Streitberg said: “The original farmin agreement with Origin provided the funding and the impetus that resulted in the Rafael discovery that has now assumed even more significance given the current focus on the West Australian and international gas markets.” Shares are trading 11.7 per cent higher at 10.5 cents at noon.
Corella Resources (ASX:CR9) announces exceptional sonic drill results at their project. In response, Corella Resources Managing Director, Tony Cormack, commented “The drill hole intercepts achieved by our definitive infill core drilling program at Tampu are nothing short of spectacular. We proudly boast Australia’s largest deposit of bright white kaolin, and we have no equal when it comes to purity.” Shares are trading 2.9 per cent higher at 3.6 cents at noon.
Commodities and the dollar
Gold is trading at US$1782.70 an ounce.
Iron ore is 0.5 per cent higher at US$126.10 a tonne.
Iron ore futures are pointing to a 0.1 per cent fall.
One Australian dollar is buying 69.09 US cents.
