by Peter Milios
The data released shows that Australia’s monthly inflation data for November has reached 7.3 per cent, which is above the consensus forecasts and ANZ Bank’s forecast of 7 per cent. This equates to a 32-year high, after rates dipped to 6.9 per cent in October. The RBA is predicting that inflation will peak at 8 per cent in the fourth quarter of this year.
ABS data has shown that Australian job vacancies were 444,200 for the month of November, representing a decline of 4.9 per cent from August 2022.
In company news, BHP (ASX:BHP) have risen to an all-time high of $48.83, as the price of iron ore is surging amidst expectations that China’s reopening will boost the demand for the commodity.
And there is more news coming from Warrego Energy (ASX:WGO). Strike Energy’s (ASX:STX) off-market takeover for Warrego Energy at 38.5c per share is allowed to be open for acceptance from shareholders. The offer is a 37.5 per cent premium to Hancock Group’s 28c offer.
Best and worst performers
The best-performing sector is Materials, up 1.69 per cent. The worst-performing sector is Information Technology, down 0.97 per cent.
The best-performing large cap is Allkem (ASX:AKE), trading 4.30 per cent higher at $12.37. It is followed by shares in IGO (ASX:IGO) and Insurance Australia Group (ASX:IAG).
The worst-performing large cap is Xero (ASX:XRO), trading 5.40 per cent lower at $67.77. It is followed by shares in EBOS Group (ASX:EBO) and Meridian Energy (ASX:MEZ).
Asian markets
Asia-Pacific shares traded higher as investors looked ahead to the US consumer price index, which would set the Federal Reserve’s trajectory in its attempt to tackle inflation after raising rates seven times in 2022. Economists polled by Reuters expect core CPI to rise 0.3 per cent on a monthly basis, which would mark the lowest reading since September 2021, Refinitiv data showed.
The Nikkei 225 traded up 0.84 per cent in its first hour of trade, and the Topix inched up 0.7 per cent. The Kospi added 0.71 per cent even as South Korea’s unemployment rate for December rose to 3.3 per cent compared to November’s 2.9 per cent, marking the highest in 11 months. The Kosdaq climbed 1.04 per cent.
The MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.35 per cent.
Sectors mixed and fairly bunched in Tuesday trading
Not much readthrough in today’s sector performance with sectors fairly bunched and mixed. Medtech and biotech saw some gains in healthcare with a number of conference updates and preannouncements (including VRTX-US , DHR-US PKI-US , though ILMN-US weaker), as well as some M&A tailwinds from OSH-US. Some positive takeaways from retail and consumer updates including CROX-US, URBN-US, SHAK-US. FANMAGs, semis extended recent gains. Travel and leisure also rallied despite some cautious commentary on cruise lines. Commodity space mixed, with metals and mining stronger but ag and commodity chemicals trailed, while energy rallied in the afternoon, reversing earlier declines. Among underperformers, some cautious sell-side commentary weighed on credit cards. Roads and rails also underperformed on downgrades. Some recent rotational winners trailed, including hospitals, managed care, and large-cap pharma. Defensives fared worst with staples, REITs, and utilities among the worst groups.
Yellen staying on as Treasury Secretary as debt ceiling worries heat up
Debt ceiling concerns continue to heat up, as evidenced by the price action in SOFR, Fed Funds futures and bills (Bloomberg), and were flagged in a Bloomberg report today about how Treasury Secretary Yellen has agreed to stay at her post following a mid-December request from the White House. There had been some headline volatility in recent months about how long Yellen would stay on, though she did say back in November that she planned to stay for the duration of Biden’s current term. Debt ceiling worries driven by the complicated political backdrop recently on display with the multiple votes needed for McCarthy to secure the House speaker post. Goldman Sachs, which projects the debt limit deadline will be sometime in August but possibly as late as October, said last week that it expects something similar to the disruptive standoffs seen in 1995 and 2011. BofA warned this week that it believes the government will temporarily be forced to default on a portion of its daily obligations by late summer or early fall. It said this period could range between a couple of days to a few weeks.
Company news
Lake Resources (ASX:LKE) has announced that additional drilling has doubled the measured and indicated resources of 2.2 million tonnes of lithium carbonate equivalent (LCE). Additional assays are now awaited to expand the area of high confidence resources. Shares are trading 2.4 per cent higher at 86 cents at noon.
Aruma Resources (ASX:AAJ) has announced that they have intersected lithium and rubidium at their project in WA. The program drilled multiple pegmatite outcrops and resampled previous drilling intersections from Tantalum Australia in 2002. Shares are trading 35.85 per cent higher at 7.2 cents at noon.
Azure Minerals (ASX:AZS) announced that lithium company SQM Australia, will make a major cornerstone investment of up to A$20 million to acquire a 19.99 per cent interest in Azure through a two-stage transaction. Commenting on SQM’s investment, Azure’s Managing Director Mr Tony Rovira said: “The new relationship will allow Azure to draw upon SQM’s technical expertise in pegmatite-hosted lithium exploration, and project development, providing Azure with strong support as we look to develop the Andover lithium assets.” Shares are trading 26.67 per cent higher at 29 cents at noon.
Commodities and the dollar
Gold is trading at US$1782.70 an ounce.
Iron ore is 2.9 per cent higher at US$122.15 a tonne.
Iron ore futures are pointing to a 0.71 per cent gain.
One Australian dollar is buying 68.99 US cents.
