by Peter Milios
Overnight, Fed Chair Jerome Powell hinted that interest rates may need to be raised for a longer duration, leading to concerns that there may be a larger increase in rates at the central bank’s upcoming policy meeting.
The yield curve measuring the gap between two- and 10-year US Treasury bonds has inverted to its deepest level since September 1981, with long-term lending rates becoming cheaper than short-term lending rates. This inversion is seen as a reliable indicator of an impending recession. The inversion occurred after the US Federal Reserve indicated a potentially more aggressive tightening policy. Traders have significantly increased their bets on a half-point rate lift in March, with Fed futures now indicating a 62 per cent chance, up from 31 per cent on Monday, and indicating a terminal rate of 5.6 per cent by mid-year.
Carsales.com has launched a $500 million rights issue with Goldman Sachs and UBS to increase its stake in Brazil’s Web Motors and to reduce leverage. The rights issue would increase its ownership of Web Motors from 30 per cent to 70 per cent, at a cost of $353 million, giving Web Motors an $883 million enterprise valuation. The offer was structured as an accelerated renounceable entitlement offer at a 10.1 per cent discount to the dividend-adjusted theoretical ex-rights price. The funds will be used to purchase the stake, reduce leverage and leave room for growth spending. The move comes six months after Carsales acquired Trader Interactive in the US for $1.17 billion.
At noon, the S&P/ASX 200 is 0.73 per cent lower at 7,310.70.
The SPI futures are pointing to a fall of 59 points.
Best and worst performers
The best-performing sector is Communication Services, up 0.32 per cent. The worst-performing sector is Energy, down 4.72 per cent.
The best-performing large cap is Computershare (ASX:CPU), trading 1.48 per cent higher at $24.99. It is followed by shares in Qantas Airways (ASX:QAN) and Sonic Healthcare (ASX:SHL).
The worst-performing large cap is Evolution Mining (ASX:EVN), trading 4.51 per cent lower at $2.75. It is followed by shares in Whitehaven Coal (ASX:WHC) and Woodside Energy Group (ASX:WDS).
Asian markets
Asia-Pacific shares tumbled on Wednesday after Federal Reserve Chairman Jerome Powell cautioned that interest rates may need to be higher than the central bank expected, fueling concerns of a potentially larger hike at the next policy meeting.
South Korea’s Kospi fell 1.18 per cent while the Kosdaq lost 0.78 per cent in its first hour of trade. Japan’s Nikkei 225′s dipped 0.13 per cent and the Topix traded fractionally below the flatline.
The Hang Seng futures was at 20,314, a lower figure compared to the Hang Seng index ’s last close at 20,534.48.
Company news
Lithium producer Sayona Mining (ASX:SYA) has successfully produced the first spodumene concentrate at its flagship North American Lithium operation in Québec, Canada. Approximately 70 tonnes of lithium concentrate was produced. Sayona’s Managing Director, Brett Lynch, “These are exciting times with the first saleable lithium concentrate to be produced soon, marking the next step in Sayona’s evolution towards becoming a leading hard rock lithium producer.” Shares are currently trading 3.1 per cent lower at 23.8 cents.
Evolution Energy Minerals (ASX:EV1) has announced that they have reached a landmark agreement with the Government of Tanzania regarding their Chilalo Graphite Project. Phil Hoskins, Evolution’s Managing Director, commented: “We have worked closely with the Tanzanian Government for an extended period of time and recognise that aligning with the Government and with the people of Tanzania is fundamental to unlocking the value of our Chilalo Project.” Shares are currently trading 17 per cent higher at 31 cents.
Tyranna Resources (ASX:TYX) has announced outstanding metallurgy results from their Muvero Prospect in Angola. Tyranna Technical Director, Peter Spitalny, commented, “Results such as these are exemplary and demonstrate the potential of the Namibe Lithium Project to be a source of high quality spodumene concentrate and highlights the potential for Direct Shipping Ore.” Shares are currently trading 15 per cent higher at 2.3 cents.
Commodities and the dollar
Gold is trading at US$1782.70 an ounce.
Iron ore futures are pointing to a 0.66 per cent rise.
One Australian dollar is buying 65.90 US cents.
