30 C
Wednesday, October 4, 2023

Inflation has peaked: ASX 0.45% cent higher at noon

Reserve Bank of Australia (RBA) head of economic analysis Marion Kohler has announced that inflation peaked at around 8% at the end of 2022 and will start to decline this year.

The RBA will publish its revised forecasts next week and it focuses on bringing inflation back to target and achieving a sustainable balance of supply and demand in the Australian economy.

And the Australian dollar rose 3.5 percent in January to 70.50¢, hitting a level last seen in June, on optimism about China’s economy reopening and a belief that central banks were close. the end of their adjustment cycles.

The Federal Reserve is expected to raise its benchmark rate to 4.5% to 4.75% at its meeting on Thursday, but investors are bearish on the US economy and expect the Fed to cut rates to 4 5% for the end of the year. .

At noon, the S&P/ASX 200 is 0.45 percent or 4 points higher at 7,510.60.

SPI futures point to a 28-point rise.

Best and worst performers

The best performing sector is REITs, up 1.49 percent. The worst performing sector is Energy, with a fall of 0.61 percent.

The best performing large cap is Lynas Rare Earths (ASX:LYC), trading 4.26 percent higher at $9.79. It is followed by shares of The Lottery Corporation (ASX:TLC) and James Hardie Industries (ASX:JHX).

The worst performing large cap is Meridian Energy (ASX:MEZ), trading 2.02 percent lower at $4.85. They are followed by the shares of the REA Group (ASX:REA) and carsales.com (ASX:CAR).

asian news

Asia-Pacific stocks traded higher as investors awaited Wednesday’s Federal Reserve meeting as well as some economic data from the region.

Japan’s Nikkei 225 gained 0.8 percent and the Topix rose 0.7 percent in its first hour of trading. South Korea’s Kospi rose 0.8 percent and the Kosdaq rose 0.78 percent, as South Korea’s export figures for January fell 16.6 percent on an annualized basis.

Hong Kong is set to release its fourth quarter GDP data later in the day. China’s Caixin manufacturing PMI data is also scheduled for release.

Softer-than-expected Employment Cost Index as Consumer Confidence falters

The fourth-quarter employment cost index fell 0.2 pp on a quarterly basis to 1.0 percent, below consensus of 1.1 percent, a third straight decline and the slowest growth since the fourth quarter of 2021. Annualized ECI rose 0.1 pp to 5.1% y/y, in line with Street, rising for the ninth consecutive quarter, but little changed from second and third quarter levels. Economists said the weakening in earnings growth reflects an easing labor market, which could have implications for the Fed given its focus on the relationship between wages and inflation (particularly services). Consumer confidence for January fell 1.2 points m/m to 107.1, missing the consensus of 109. The current situation index rose 3.5 points on a monthly basis to 150.9, although the expectations index fell 5.6 points monthly to 77.8, with one report calling a figure below 80 signs of a recession within the next year. Inflation expectations for the next 12 months rose 0.2 percentage points to 6.8%, although still below the June high of 7.9%. The labor market spread (those who say jobs are plentiful vs. hard to get) improved 1.2 percentage points from December to 36.3 percent. Chicago PMI for January fell 0.6 points to 44.3, missing the consensus 45.4, with slowdowns in new orders, employment and inventories.

tuesday put and take

A few things to think about for today. Earnings results look mixed to improve with some help from the bottom bar (this appears to be the case for a number of industry names), along with increased focus on cost reduction/expense control. Big tech companies report on Wednesday and Thursday and while weak earnings dynamics are widely known, the group has recently benefited from a pick-up in buying interest. More support for disinflation narrative with Q4 employment cost index easing as Whole Foods boosts supplies to help lower prices (WSJ). Some Thoughts The FOMC could be largely de-risked tomorrow given widespread expectations that Powell will take a hawkish tone. Some sell-off expectations were related to the end-of-month rebalancing, although BofA has noted that the biggest turnovers may be within fixed income, while only part of the rebalancing is likely to take place by the end of the month. Outside the US, January PMI data from China was firmer, although the China reopening rally that has been a tailwind for global risk sentiment has lost momentum after the LNY holiday.

Latest earnings topics

Some themes to draw from the latest batch of earnings. Expense control and cost reduction continue to be highlights as companies look to cushion margins (UPS, Whirlpool, International Paper). Despite the disinflation narrative pull, several companies highlighted continued inflation/input cost pressure (McDonald’s, Oshkosh). More companies have talked about easing supply chain restrictions (General Motors, Polaris), though they also continue to be flagged as a headwind (Lennox). The automotive sector continues to be a focus of strength for the economy (General Motors, NXP Semiconductor). Stock reduction has been a big theme in the fourth quarter, although some companies are also talking about it coming to an end (International Paper, AO Smith, Pentair). Smoother consumption and mobile demand mentioned repeatedly in the semi space (NXP Semiconductor). Builders have continued to point to a more recent rebound in housing demand (Pulte, MDC Holdings). The Covid normalization has continued to affect the guidance of healthcare companies (Pfizer). While China’s Covid zero pivot was expected to be a tailwind in 2023, it was a demand headwind in Q4 (Corning).

company news

Parabellum Resources (ASX: PBL) has announced that its assay results show strong rare earth oxide mineralization. In response, President Mark Hohnen commented: “We continue to be very impressed with the progress that has been made at Khotgor over the past 12 months with metallurgical test work, resource modelling, engineering studies and pilot plant construction. “. Shares are trading 1 percent higher at 50 cents.

AML3D (ASX:AL3) enters the US defense industry with the full-scale sale of its fabrication metal 3D printing system to support the US Navy. AML3D CEO Ryan Millar said: ” This sale is a significant opportunity for AML3D as it is part of a long-term strategic partnership with the US Navy to help them increase production of submarines with advanced additive manufacturing technology.” Shares are trading 50 percent higher at 10.5 cents.

antisense therapeutics (ASX:ANP) has announced positive results in an animal study of combination therapy with DMD. In response, Dr. George Tachas, Director of Drug Discovery and Patents at Antisense Therapeutics, said: “The encouraging effects seen in our study of combination treatment on EDL muscle function suggest the potential for combination treatment to show further benefits.” beyond monotherapy is on the right.” track.” The shares are trading 17.1 percent higher at 9.6 cents.

trigger minerals (ASX:TMG) has announced positive results from 2022 resource definition drilling at Throssell Lake that have confirmed the consistency and robustness of the deposit’s potassium sulfate (SOP) resource. Results from the brine assays and the MRI geophysical well log showed average potassium grades of 4549 mg/L and basal aquifer sand zones measuring a specific yield of 0.2 to 0.22, respectively. The results will contribute to an improved mineral resource estimate expected later this month. Shares are trading flat at 3.6 cents.

silver ores (ASX:ARD) has completed the first helicopter-borne reconnaissance survey of rock chips over Mt Palgrave Prospect in Western Australia. The exploration program, which began in November 2022, evaluated the logistics of upcoming extensive land-based exploration programs. The Mt Palgrave copper prospect has historical rock fragment samples with copper assays ranging from 1.12% to 14.2%, and copper mineralization has been encountered in the Discovery Siltstone formation within bed planes. , fractures and matrix. Shares are trading 6.25 percent higher at 1.7 cents.

lepidic (ASX:LPD) announced that it has entered into a binding sulfuric acid supply agreement with Interacid Trading SA (“Interacid”) for the supply of sulfuric acid for the Company’s planned Phase 1 Project. Interacid is a wholly-owned subsidiary of Sumitomo Corporation and has provided terminal, logistics and marketing services for sulfuric acid for nearly 50 years. Under the agreement, Interacid will supply the Company’s high specification sulfuric acid for an initial period of three years. Managing Director Joe Walsh said, “Sulfuric acid is the single largest consumable for Phase 1 and a key reagent in the L-Max® process.” Shares are trading flat at 1.5 cents.

Commodities and the dollar

Gold is trading at US$1,782.70 an ounce.
Iron ore is 0.7% lower at US$128.95 a tonne.
Iron ore futures point to a 0.51% rise.
One Australian dollar is buying 70.53 US cents.

pedro milios

Peter Milios is a recent graduate of the University of Technology, majoring in Finance and Accounting. Peter currently works with equity research analyst Di Brookman for Corporate Connect Research.

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