The local market has commenced the week in the green with the S&P/ASX 200 up 0.94 per cent or 63.70 points higher to 6,849.40 at noon. This comes off the back of US equities ending the week with big gains after another set of better-than-expected earnings. Positive reports on inflation and consumer sentiment added to market enthusiasm, along with Apple’s results boosting the market.
This week will be an eventful one for financial markets, with US earnings reports expected from a number of prominent companies, including Stryker, Aflac, Pfizer, Moderna, Toyota, Honda, Qualcomm, PayPal, Starbucks, and Kellogg’s, among others. Policymakers at the US Federal Reserve will gather for the two-day November policy meeting of the Federal Open Market Committee (FOMC) beginning Tuesday, with a key interest rate decision expected on Wednesday in the US. The US central bank is widely expected to raise its benchmark federal funds rate by another 75 basis points as it continues to combat persistently high inflation. Fed officials are projecting a year-end federal funds rate of roughly 4.5 per cent.
The SPI futures are pointing to a rise of 71 points or 1.05 per cent.
Best and worst performers
The best-performing sector is Information Technology, up 3.11 per cent. The worst-performing sector is Materials, down 0.06 per cent.
The best-performing stock in the S&P/ASX 200 is GrainCorp (ASX:GNC), trading 7.73 per cent higher at $8.36. It is followed by shares in ARB Corporation (ASX:ARB) and Homeco (ASX:HMC).
The worst-performing stock in the S&P/ASX 200 is Ramelius Resources (ASX:RMS), trading 2.70 per cent lower at $0.72. It is followed by shares in Regis Resources (ASX:RRL) and Deterra (ASX:DRR).
Asian news
Shares in the Asia-Pacific have risen in early trade on Monday ahead of China’s factory activity data that’s slated to be released, and as markets look ahead to the U.S. Fed meeting later this week.
The Nikkei 225 has risen 1.32 per cent in early trade, and the Topix gained around 1 per cent. South Korea’s Kospi has added 0.59 per cent and the Kosdaq was 0.83 per cent higher.
MSCI’s broadest index of Asia-Pacific shares outside Japan has gained 0.3 per cent
China’s National Bureau of Statistics is expected to release its Purchasing Managers’ Index data Monday, and analysts expect a reading of 50, according to a Reuters poll.
September core PCE in line, August sees a slight downward revision
September’s core PCE price index was up 0.5 per cent month-on-month, which was in line with the consensus and August’s downwardly revised level (lowered to 0.5 per cent from original 0.6 per cent rise). Core PCE was up 5.1 per cent year-over-year, a bit below the 5.2 per cent consensus. Headline Personal Consumption Expenditure (PCE) was up 0.4 per cent month-on-month, slightly higher than August’s 0.3 per cent (which was also the consensus). Personal income rose 0.4 per cent month-on-month, matching consensus and August’s upwardly revised figure (up from 0.3 per cent month-on-month). Personal spending was up 0.6 per cent month-on-month, which was slightly higher than consensus for 0.4 per cent month-on-month but in line with August’s upwardly revised pace (was up 0.4 per cent month-on-month). Elsewhere, September pending-home sales dropped 10.2 per cent month-on-month, much faster than expected 2.5 per cent month-on-month drop and August’s 2.0 per cent monthly decline. The release cited rate pressures and homeowners unwilling to list their houses and risk losing low locked-in mortgage rates. Final October UMich consumer sentiment report confirmed respondents’ five-year inflation expectations at 2.9 per cent, but saw slightly lower one-year expectations (down to 5.0 per cent from preliminary report’s 5.1 per cent).
Earnings metrics lagging
According to FactSet’s latest Earnings Insight report, the blended earnings growth rate for Q3 S&P 500 EPS currently stands at 2.2 per cent. This compares to the 2.8 per cent expected at the end of the quarter. Of the 52 per cent of S&P 500 companies that have reported for Q3, 71 per cent have beaten consensus EPS expectations, below the 78 per cent one-year average. In aggregate, companies are reporting earnings that are 2.2 per cent above expectations, below the 6.5 per cent one-year average positive surprise rate. Some of the more upbeat themes revolve around pricing power, consumer resilience, spending on services/travel/leisure, industrial and non-res construction tailwind and brand strength. The more cautious themes revolve around heightened macro uncertainty, lingering inflation and supply chain pressures, outsized FX headwinds, cloud spending scrutiny, longer deal cycles in tech, weaker online advertising, spending shift away from big-ticket items, falling used car prices, lacklustre China recovery, worsening European macro and difficult Covid comparisons.
Earnings risk and monetary policy shift
The market is still dealing with a lot of moving pieces. Earnings risk has ratcheted up with the disappointing results and guidance out of the big tech firms. This has put more focus on the need for sticky consensus estimates to come down. Morgan Stanley noted NTM S&P 500 EPS consensus down only 2 per cent from the peak in late June. However, some think that the market may be cushioned from a broader earnings reset by the extent of the multiple contraction that has already taken place. The bigger issue for the market seems to be the recognition that the Fed-led global tightening cycle is getting closer to the end. Even shifts at the margin have been flagged as having the potential to unleash a pain trade to the upside given depressed positioning and sentiment dynamics. However, the Fed is also cognisant of the market’s outsized monetary policy focus/obsession and likely to remain unrelenting in its higher-for-longer messaging (and pushback against rate cut talk) to curb a meaningful easing in financial conditions.
Company news
European Metals Holdings (ASX:EMH) announced significant developments in the processing flowsheet for the Cinovec vertically integrated battery metals project in the Czech Republic. The simplified extraction process delivered an exceptional clean battery-grade lithium product with improved economical features. Some highlights include: a significant reduction in the Lithium Chemical Plant (LCP) extraction process from 15 to 7 and the capability to deliver very high purity lithium hydroxide, lithium carbonate, lithium sulphate or lithium phosphate. In response to the news, Keith Coughlan, Executive Chairman, stated, “The completion of flowsheet development work in both the FECAB and LCP is a significant milestone for the Cinovec Project. Testwork to confirm optimised FECAB and LCP flowsheets is now complete and production of significant quantities of battery grade lithium chemicals is expected to be available for distribution to long term European offtake partners early next year.” Shares are trading up 5.3 per cent to 80 cents.
Carbon Revolution (ASX:CBR), whose lightweight carbon fibre wheels are used on some of the world’s best and most-sought after cars, has provided a business update for Q1 FY23. Highlights include Q1 FY23 revenue of $10.4 million, delivering strong revenue growth of 66.2 per cent over the previous corresponding period. In a customer program update the company announced that Ford is launching a new Mustang core vehicle program with the option of Carbon Revolution’s wheels, the first time the company’s wheels have featured on a Ford core vehicle program. The company has a current cash position of $10.7m following committed expenditure on new wheel programs and the Mega-line project with emerging challenges in delivering anticipated financing. And lastly, a Modern Manufacturing Initiative grant approved by the new labour government with the first tranche of $4.8m expected in November or December 2022. Shares are trading 81.4 per cent higher at 39 cents.
Medical device and consumer electronics manufacturer Nuheara (ASX:NUH) has announced that it will be receiving US Food and Drug Administration (FDA) clearance for its Self-Fitting OTC Hearing Aid. Nuheara’s HP Hearing PRO has been cleared by the FDA for both 874.3325 self fitting and the 800.30 OTC hearing aid classifications under a new product classification code “QUH”. Following the landmark law establishing a regulatory category for over-the-counter (OTC) Hearing Aids in the United States (enacted on 17 October 2022) Nuheara plans to bring to market its first medical device as the HP Hearing PRO under its worldwide Trademark License Agreement for use of HP trademarks on Nuheara’s hearing aids, personal sound amplification devices and accessories. Shares are trading 33.3 per cent higher at 22 cents.
Lepidico (ASX:LPD) today announced their Quarterly Activities Report for the period ending 30 September 2022. Key Points include: Development Strategic Metallurgy completed all planned pilot trial works and associated reports including lithium hydroxide refining and by-product manufacture that confirm Phase 1 design parameters with nominal battery grade lithium hydroxide recovered using LOH-Max. Third-party crystalliser vendor advised following test-work on pilot trial feed material; lithium hydroxide “crystals are much more pure than that produced from the [conventional] sodium sulphate route”. Independent Engineer review of final pilot trial reports underway; completion of this technical due diligence is a key gating item for securing Phase 1 Project debt. Chemical plant FEED scheduled to complete in November following procurement optimisation and design refinements; concentrator FEED successfully completed in the prior quarter. By-product pilot trials result in, “excellent separation of potassium sulphate from impurities” and “high recovery of caesium”. Request for quotations issued to shortlisted UAE chemical plant main construction contractors. Further impressive drill results from Helikon 4 that include 34.8 m @ 1.25 per cent Li2O from 22 m extend the zone of mineralisation down dip and along strike to the east. Upgraded Karibib Measured & Indicated Mineral Resources – from previous Inferred estimates – well advanced, with the objective of extending Phase 1 operating life to 20 years. Further drilling is imminent at Helikon 2 and 3 to follow up on these excellent Helikon 4 results. Shares are trading 5.3 per cent higher at 2 cents.
Novatti Group (ASX:NOV), a leading fintech enabling businesses to pay and be paid, has provided an update on its September quarter FY23 performance. Commenting on the results, Novatti Managing Director Peter Cook said: “Novatti continued its long-run growth trend in the September quarter, with quarterly sales revenue of $10.5m, representing a year-on-year increase of 98 per cent. Looking forward, we remain particularly excited about the potential for this growth to continue as the business rapidly shifts from a development to a monetisation phase. Novatti’s global payments ecosystem is now established after several years of substantial investment. As a result, Novatti is able to increasingly focus on generating sales traction, leveraging the innovative services across its payments value chain. For example, Novatti’s acquiring business is already servicing more than 800 merchants, highlighting the strong demand for these services.” Shares are trading 8.3 per cent higher at 20 cents.
Lake Resources (ASX:LKE) today announced their Quarterly Activities Report for the period ending 30 September 2022. Some key highlights include: David Dickson appointed Chief Executive Officer to lead the company’s transition from exploration focus to development, construction and toward production. Sean Miller was appointed as Corporate Development Officer to accelerate activity across Lake’s three 100 per cent owned exploration projects Cauchari, Olaroz and Paso. Following the end of quarter Offtake and Strategic Investment Conditional Framework Agreements signed with WMC Energy and SK On for up to 50,000 tpa lithium carbonate from their Kachi project. Demonstration plant construction and commissioning was completed during the quarter. The demonstration plant will be operated by Lilac Solutions as part of their agreement to earn equity in the Kachi Project. Definitive Feasibility Study (DFS) and Environmental Social Impact Assessment (ESIA) studies continue with demonstration plant validation required prior to completion of the DFS. Lake is well funded with a cash balance of $A158.8m and no debt at 30 September 2022. Shares are trading 4.6 per cent higher at $1.03.
Warrego Energy (ASX:WGO) today announced their Quarterly Activities Report for the period ending 30 September 2022. Dennis Donald, the Managing Director and CEO, commented on the results: “Warrego Energy continues to build a strong foundation for major growth with a number of key results and activities during the September Quarter. We started the quarter off impressively with news that the WE-3 well had confirmed the high-quality conventional gas resource in the northern extent of the West Erregulla gas field in the Kingia Sandstone. The Kingia Sandstone reservoir was between 4,731m MD and 4,791m MD with a gross gas column of 60m. Those positive WE-3 results were later reflected in the excellent news announced in July of a major 41 per cent upgrade of West Erregulla gas field to 422 PJ gross 2P Reserves. Independent Reserves certifier NSAI incorporated the petrophysical results of the logs from the successful appraisal drilling at WE-3 into their subsurface modelling and resource estimation within the Kingia Sandstone, leading to a substantial increase.” Shares are trading unchanged at 14 cents.
Magnis Energy Technologies (ASX:MNS; FSE:U1P) presented their Quarterly Activities Report and overview of operations for the period ended 30th September 2022. Key highlights include: Magnis’ Lithium-ion battery manufacturing facility operated by Imperium3 New York Inc (“iM3NY”) commences commercial production and begins scale up phase towards Gigawatt scale. At capacity, iM3NY expects to produce ~15,000 cells per day. The Bankable Feasibility Study Update confirms strong financial and technical viability for the Nachu Graphite Project. Positive results continue in C4V’s Extra Fast Charging battery program using 7Ah (Amp hour) commercial graded cells with 20 minute-charge and 20-minute discharge. Results show only 3 per cent loss of the initial cell capacity after approximately 2600 cycles. Magnis’ US traded OTC shares (OTC:MNSEF) has been approved by the US’ Depository Trust Company for real-time electronic trading and settlement in USD making it easier and cheaper for US investors. Construction of the Eco-village as part of the Resettlement Action Program continues to progress and is expected to be completed in the 4th quarter of 2022. Magnis’ Corporate Social Responsibility programs continue to provide much needed infrastructure for the local community. Shares are trading 1.4 per cent higher at 38 cents.
Mobile-first online wagering provider BlueBet Holdings (ASX:BBT) announced a strategic investment in Low 6 Limited, a leading UK-based free to play sports gamification platform provider. Low6 specialises in providing white-labelled gamification services to global betting operators and sports brands, driving higher customer acquisition, engagement, and retention with branded gaming experiences across multiple game formats including Fantasy, Picks, Trivia and Brackets. BlueBet expects to leverage its investment in Low6 to expand its product offering into free to play games, to assist in onboarding and engaging its customer base. The US$500,000 investment enables BlueBet to launch products on Low6’s platform for a fiveyear period, and underscores BlueBet’s commitment to add new and innovative products to its portfolio. BlueBet Chief Executive Officer, Bill Richmond, commented: “We are excited to announce our strategic investment in Low6, one of the global leaders in sports gamification technology. “We see free to play gaming as a huge adjacent opportunity to our core sports books and know there is real appetite from our customers – particularly our younger customers who make up a considerable portion of our book – to extend their playing time with BlueBet into new formats such as Fantasy sports. “We look forward to working with Low6 to create bespoke iGaming solutions which fit with our differentiated consumer brands, which will attract new customers to BlueBet in Australia and ClutchBet in the US.” Shares are trading 2.3 per cent higher at 45 cents.
Red Mountain Mining (ASX:RMX) announced that the company has successfully applied for two tenements prospective for lithium within the Bynoe Lithium Province in the Northern Territory. The two prospective tenement applications are adjacent to Core Lithium’s (ASX: CXO) Finniss Lithium Project and Lithium Plus Minerals’ (ASX: LPM) Bynoe Lithium Project, indicating a high level of lithium prospectivity throughout the region. In response, Red Mountain Chairman, Troy Flannery commented “The fundamental movement for increased electrical storage and the growth in electric vehicle markets is driving unprecedented growth in the lithium market. We are pleased to have strengthened our asset portfolio with the addition of the Charlotte Lithium project and look forward to progress exploration upon granting of the two project tenements.” Shares are trading 25 per cent at a half of 1 cent.
Metal Bank (ASX:MBK) provided an exploration update from its Millennium copper-cobalt-gold (Cu-Co-Au) project in Queensland (MBK earning up to 80 per cent). All assay results have now been received for MBK’s diamond drill (DD) hole depth extensions in the Southern and Central Resource areas, along with results for reverse circulation (RC) exploration drilling in the Northern Area, as part of the resource infill and extension drilling completed in September. Commenting on the results, Metal Bank’s Chair, Inés Scotland said: “Our work demonstrates the critical minerals opportunity at the Millennium Project extends to depth below the existing bulk near surface copper-cobalt-gold Resource. The high-grade cobalt intersections at depth show strong support for potential underground extraction and the results in the Northern Area provide potential for adding further to the mineralisation at Millennium. We are now in the process of reviewing all results and planning the next phase of work.” Shares are trading 14.3 per cent higher at 0.4 of 1 cent.
Culpeo Minerals (ASX:CPO) announced that it has intersected 250 metres of visible copper sulphide mineralisation in the first hole (CMLCD010) of the Phase 2 drilling program at its Lana Corina Project in Chile. In response to the announcement, Culpeo Minerals’ Managing Director, Max Tuesley, commented, “with the copper price remaining buoyant, Culpeo presents a unique copper investment opportunity, providing exposure to the significant growth in the electric vehicle and renewable energy market and we believe Culpeo is in a position to rapidly delineate a significant, high-grade copper resource at Lana Corina.” Shares are trading 4.6 per cent higher at 12 cents.
North Stawell Minerals (ASX:NSM) today announced their September Quarter update. Chief Executive Officer Russell Krause commented: “Excellent progress continued through the September Quarter, including analysis of results from Phase 1 (regional) drill testing of 20 priority targets under Murray Basin cover, and planning for follow up Phase 2 (infill) drilling of 8 prospects with exciting targets. Targets are interpreted to have structural and geological similarities to the multi-million-ounce Stawell Mine. In total, 18 prospects have been drill-tested with air core or RC drilling, one target was excluded on revised interpretation and only one target was inaccessible. Drilling stopped in April for weather, after completing planned drilling and commenced infill drilling of prospects. During the quarter, results were returned for eight targets, including Germania, Darlington, Caledonia, Old Roo, Glenorchy East, Pleasant Creek and Doctors Hill. Results include minor infill drill programs from Old Roo and Glenorchy East, and resplits from Lubeck Tip. An air core rig is booked for mid-November and will initially focus on Phase 2 infill drilling at Lubeck Tip, Challenger, Caledonia, Old Roo, Doctors Hill and Wimmera Park.” Shares are trading down 7.7 per cent at 12 cents.
Australian medical technology company LBT Innovations (ASX:LBT), a leader in medical technology automation using artificial intelligence, released their Quarterly Cashflow report and business update for the quarter ended 30 September 2022. Key Highlights include: LBT delivers positive operating cash flow for the Quarter of $0.4 million. Two APAS Independence sales completed during the Quarter. Sales revenue of $0.5 million. Updated Product Pipeline Strategy announced, expanding application of APAS technology: $1.5 million funding for benchtop APAS instrument through MTPConnect’s CTCM program and successful APAS Pharma proof-of-concept completed with multinational pharmaceutical company. LBT launches Entitlement Offer seeking to raise $3.5 million to support sales growth. 30 September 2022 cash balance of $2.8 million plus $1.9 million in near term receivables. Shares are trading 5 per cent higher at 6 cents.
Arovella Therapeutics (ASX:ALA), a biotechnology company focused on developing its invariant Natural Killer T (iNKT) cell platform for cancer treatment, today released its first quarter of FY 2023 update. A summary of the highlights for the quarter includes: ALA entered into a Strategic Collaboration with Imugene to combine Imugene’s onCARlytics platform and Arovella’s iNKT cell therapy platform in preclinical trials. The company appointed Mr Gary Phillips as a Non-Executive Director. ALA completed a strategic review of the Company’s operations, deciding to close the Perth R&D Facility. Shares are trading 3.2 per cent lower at 3 cents.
BluGlass (ASX:BLG) provided the following update this morning for their Quarterly Report for the three months ended 30 September 2022 (Q1 FY23). Highlights of the activities include: Silicon Valley fab now operational and contributing to technology roadmap: Significantly speeding development to leap-frog cycle times at contract manufacturers. The company joined leading GaN lighting and electronics consortium, gaining access to pre-eminent GaN faculty and world-class facilities. Along with appointing Rob Ambrogio as Chief Financial Officer to lead BluGlass’ finance functions. Shares are trading 8.8 per cent lower at 3 cents.
Tamboran Resources (ASX:TBN) advised today that it has successfully completed its equity raise announced on Tuesday, 20 September 2022 to raise approximately A$137 million through a two-tranche placement and share purchase plan (SPP). The Placement to new and existing shareholders of approximately A$137 million where 652,452,288 shares were issued at A$0.21 per share. Shares are trading 2.5 per cent lower at 20 cents.
Kingston Resources (ASX:KSN) today released their September 2022 Quarterly Activities Report. Kingston Managing Director, Andrew Corbett, said: “The September quarter has seen the achievement of significant company objectives including the advancement of several work programs at Mineral Hill aimed at establishing a five-year mine life, and the initiation of a strategic review at Misima following the delivery of a successful Definitive Feasibility Study last quarter. Kingston’s Chief Geologist Stuart Hayward and his team delivered positive drilling results at Pearse, SOZ and Jack’s Hut. The results at Jack’s Hut are particularly important as the prospect is outside of current Mineral Resource and Ore Reserve estimates and represents a new mining opportunity with great potential to add to our five year mine plan.” Shares are trading 3.8 per cent higher at 8 cents.
Carbonxt Group (ASX:CG1) has released its report for the September 2022 quarter and provided an update on the key areas of activity for the period. Managing Director Warren Murphy commented: “The Company is delighted to see the positive turnaround in cash this quarter, as well as the increase in pricing achieved across several contracts. The long-term renewal of our largest ACP contract with Wisconsin Public Service reflects the outstanding pollution control solutions developed by the Carbonxt team. Demand for technologies that reduce emissions and reduce pollution continue to be in high demand and Carbonxt is at the forefront of this market with existing products and a pipeline of exciting new technologies.” Shares are trading unchanged at 11 cents.
ABx Group (ASX:ABX) is a uniquely positioned, high-tech Australian company at the cutting edge of creating new sources and technologies for strategic minerals and chemicals. The company released today their Quarterly report and activity statement for the 3 months to 30 September 2022. Highlights include: rare earth elements major expansion of ionic adsorption clay prospects. ABx’s confirmed REE IAC mineralisation is the main target at Deep Leads & Rubble Mound which amalgamated into a 6.5 x 7km REE mineralised zone. Additionally, Alcore (Production of aluminium fluoride from aluminium smelter waste): Positive test results using the specialised laboratory reactor to investigate the reaction of bath with oleum to produce hydrogen fluoride. It is expected that the initial operating conditions for the pilot plant reactor will be determined early in the next quarter. The design and layout of the pilot plant was further developed, and it is anticipated that
pilot plant construction will commence in the next quarter. Bauxite Operations: Planning to be mining in Queensland and Tasmania from Q3 2023 Queensland and Tasmanian mine lease applications progressing well, with surveys and studies well underway and on track for submissions Corporate Appointment of Dr Mark Cooksey as Managing Director on 1 September 2022 Group available cash at quarter end was $2.98 million ABx securities total 223,590,814 ordinary shares and 78,820,500 quoted options. Shares are trading 3.5 per cent higher at 15 cents.
Commodities and the dollar
Gold is trading at US$1643.21 an ounce.
Iron ore is 0.8 per cent lower at US$81.85 a tonne.
Iron ore futures are pointing to a fall of 3.4 per cent.
One Australian dollar is buying 64.07 US cents.
