ASX pushes higher in morning trading: Aus shares up 0.3% at noon

The ASX moved higher in Monday trading, despite the weaker markets in the US on Friday.

At noon, the S&P/ASX 200 is 0.28 per cent or 18.80 points higher at 6847.50.

The SPI futures are pointing to a rise of 9 points.

Best and worst performers

The best-performing sector is Energy, up 3.63 per cent. The worst-performing sector is Real Estate Investment Trusts, down 0.54 per cent.

The best-performing stock in the S&P/ASX 200 is Whitehaven Coal (ASX:WHC), trading 7.15 per cent higher at $8.54. It is followed by shares in New Hope Corporation (ASX:NHC) and Beach Energy (ASX:BPT).

The worst-performing stock in the S&P/ASX 200 is Imugene (ASX:IMU), trading 6.12 per cent lower at $0.23. It is followed by shares in Fortescue Metals Group (ASX:FMG) and PointsBet Holdings (ASX:PBH).

Asian markets

Shares in the Asia-Pacific are trading mixed on Monday as investors await the results of a private survey on Chinese services sector activity.

Hong Kong’s Hang Seng index has fallen 1.29 per cent in early trade, with the Hang Seng Tech index down more than 2 per cent.
In Japan, the Nikkei 225 has fallen 0.21 per cent, and the Topix index has lost 0.17 per cent.
The Shenzhen Component in mainland China has dipped 0.77 per cent, and the Shanghai Composite has slipped 0.32 per cent.
In South Korea, the Kospi has risen 0.3 per cent while the Kosdaq has fallen 0.93 per cent.
MSCI’s broadest index of Asia-Pacific shares outside Japan is 0.68 per cent lower.

China’s Caixin Services Purchasing Managers’ Index is due out on Monday. July’s print came in at 55.5, representing a growth in activity. The official non-manufacturing PMI for August is 52.6.

OPEC+ to weigh rollover or small cut at Monday meeting

Reuters cited multiple sources saying OPEC+ is likely to keep oil output quotas unchanged for October on Monday, although some sources would not rule out a small production cut to bolster prices that have slid due to fears of an economic slowdown. They could discuss a cut of 100K bpd to bring production quotas back to August levels and offer the market some reprieve with a symbolic move. Another consideration is that supply could be boosted by returning Iranian crude (1M bpd) if Tehran secures a deal with world powers on its nuclear work. Still, many OPEC states are producing below targets and fresh Western sanctions are threatening Russian exports. However, Reuters cited a WSJ article indicating that Russia does not support an oil production cut at this time and it is likely OPEC+ will keep its output steady.

US allows China tariffs to continue pending review

Bloomberg reported that the Biden administration will allow Trump-era tariffs on Chinese imports to continue while it reviews the need for the duties that were slated to expire in July. USTR said Friday that tariffs will continue after the administration received a formal request from businesses benefiting from them. This follows months of debate on the issue amid suggestions that reducing tariffs on household items could help ease inflationary pressure (though analysts have argued that removal of such tariffs would have little impact because they don't affect the biggest drivers of inflation). Reuters noted that consideration of this move had been put on hold following China's military manoeuvres near Taiwan after House Speaker Pelosi's visit. USTR will move on to a formal review of whether to keep the tariffs in place, a process that could take months.

China to issue $29B of special loans to finish housing projects

Caixin, citing several sources, reported China will issue CNY200B ($29B) in special loans from policy banks to help developers finish stalled housing projects. Noted backdrop of the liquidity crisis among China's property developers led to a plunge in new projects and put about 5 per cent of existing apartment construction on hold, sparking mortgage payment boycotts by angry homebuyers. Spreading mortgage strike has sparked fears that the crisis will further squeeze Chinese banks, which are already grappling with liquidity stress among developers. Regulators made clear that the rescue fund doesn't aim to stimulate the real estate market or rescue developers. Funds will be strictly limited to the construction and delivery of residential projects that have been sold or suspended due to developers' liquidity difficulties.

China Covid concerns continue

Reuters reported Shenzhen said it will adopt tiered antivirus restriction measures starting on Monday and announced a new round of COVID-19 testing. Follows weekend lockdown that started Saturday. Based on weekend testing results, Shenzhen will classify its areas into three categories, reflecting low, medium, and high risk of infection. Low risk areas will have mobility restrictions lifted while lockdowns will remain in place in "high" and "medium" risk neighbourhoods. Chengdu announced an extension of lockdown curbs for most of the city and will conduct more mass testing. Authorities announced Jinjiang district will further intensify lockdowns and extend control measures for at least three days starting Sunday. According to Caixin, 33 cities are under partial or full lockdowns, affecting more than 65M residents.

Chinese banks' real estate NPLs swell

Nikkei analysis found NPLs to the real estate sector reached CNY234.69B ($34B) at June-end, up 27.3 per cent from December. Compared to a 6.5 per cent increase in all-industry NPLs. Total loans to the real estate sector grew 3.3 per cent, while overall lending rose 7.9 per cent, indicating banks have started to dial back their exposure to the ailing sector. Real estate NPL ratio climbed to 3.24 per cent in June from 2.63 per cent in December while aggregate ratio edged down to 1.37 per cent from 1.39 per cent. Property sector NPLs now account for 12.3 per cent of all bad loans, up 2 points from December as 22 of 26 banks saw their ratio of NPL to the sector rise by double-digits during H1. Major banks saw sharpest growth in sector NPL, though managed to post strong profit growth while bad loan coverage remained elevated ranging between 173 per cent and 409 per cent. However, analysts warned smaller institutions were more vulnerable with weaker profitability and capital buffers.

Company news

Kingwest Resources (ASX:KWR) has announced that infill drilling completed by BML at the Selkirk Deposit has further confirmed the high-grade nature of the gold mineralisation. The Selkirk Deposit is a discrete gold project in the Menzies Gold Project with a Mineral Resource Estimate (MRE) of 11,500 oz. The MRE remains open at depth. The infill drilling was required prior to completing an updated MRE, an optimised pit shell and mine planning. Kingwest CEO Ed Turner commented that “BML is making good progress as we move towards recommencing production at Selkirk and these drill results give us more confidence in the resource as well as underpinning support the proposed cut back of the pit. The recommencement of commercial mining at Menzies after more than 20 years since open cut mining finished is significant and we expect this to be the first of a number of mining operations at Menzies that should deliver attractive short and medium-term cash inflow to KWR.” Shares are trading 11.3 per cent higher at 7 cents.

Great Boulder Resources (ASX:GBR) has announced new drilling results from the Side Well Gold Project in Western Australia. Great Boulder’s Managing Director Andrew Paterson commented: “This spectacular result is the highest-grade intersection and the highest individual gold assay drilled to date at Side Well. “It demonstrates that we’ve not yet closed off this high-grade vein area, which sits in the northern end of Mulga Bill containing many of the highest-grade intersections in the project." Shares are trading 13.4 per cent higher at 11 cents.

Tamboran Resources (ASX:TBN) has announced a significant upgrade to the Contingent Resources at the EP161 tenement in the Beetaloo Basin, which is operated by Santos. The unrisked gross best estimate for contingent resources has been increased by 164 per cent to 1.6 trillion cubic feet and follows the confirmation of successful flow results from the T2H and T3H wells. According to the company, the updated flow rates represent “a material derisking of the Beetaloo Basin” and that “both wells exceed what Tamboran believes to be the commerciality threshold for their assets in the Basin”. The company also commented that its 100 per cent owned and operated Maverick well in EP136 remains on track to be spudded shortly. Shares are trading 6.4 per cent higher at 25 cents

Commodities and the dollar

Gold is trading at US$1711.49 an ounce.
Iron ore futures are pointing to a rise of 1.05 per cent.
One Australian dollar is buying 67.84 US cents.