ASX surges higher in morning trading: Aus shares up 1.04% at noon

At noon, the S&P/ASX 200 is 1.04 per cent or 71.60 points higher at 6965.80.

The SPI futures are pointing to a rise of 72 points.

Best and worst performers

The best-performing sector is Materials, up 2.08 per cent. The sector with the fewest gains is Health Care, up 0.04 per cent.

The best-performing stock in the S&P/ASX 200 is De Grey Mining (ASX:DEG), trading 6.45 per cent higher at $1.16. It is followed by shares in Nickel Industries (ASX:NIC) and EML Payments (ASX:EML).

The worst-performing stock in the S&P/ASX 200 is Liontown Resources (ASX:LTR), trading 3.05 per cent lower at $1.75. It is followed by shares in Chorus (ASX:CNU) and Whitehaven Coal (ASX:WHC).

Asian markets

Shares in the Asia-Pacific have risen on Monday on improved risk sentiment.

The Nikkei 225 in Japan has gained 1.09 per cent in early trade, while the Topix index has advanced 0.7 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan has ticked 0.38 per cent higher.

Mainland China, Hong Kong and South Korea markets are closed for a holiday. The US is set to release its consumer price index for August later in the week.

Global supply chains improve as China-US shipping rates see fastest fall on record

Support for peak inflation has been driven in part by steady improvement in global supply chains. Nikkei and Yahoo! Finance discussed a sharp fall in global shipping costs as falling demand helps ease container logjams and quicken delivery times. Rate to ship containers from Shanghai to the West Coast fell 23 per cent in the first week of September, marking the fastest decrease on record going back to 2009. Meanwhile, NY Fed's Global Supply Chain Pressure Index has fallen for four straight months through August to its lowest since January 2021. Rising inventories at retailers corresponding with a fall in demand for ocean freight as inflation and rising interest rates drive a pullback in discretionary spending. Weakening global economic activity has also translated into an easing of the global semiconductor shortage, resulting in a buildup of inventories. All this is playing into thoughts inflation pressures (in discretionary categories) are beginning to dissipate.

Biden to expand curbs on US chip exports to China

Reuters, citing sources, reported Biden administration plans next month to broaden curbs on US shipments to China of semiconductors used for AI and chip making tools. New regulations to consolidate earlier actions, said to be based on restrictions communicated in letters earlier this year to three US companies -- KLA, Lam Research and Applied Materials. Rules would also codify restrictions in Commerce Department letters sent to Nvidia and Advanced Micro Devices last month instructing them to halt shipments of several artificial intelligence computing chips to China unless they obtain licences. The Noted Chamber of Commerce last week warned members of imminent restrictions on AI chips and chip making tools and the Commerce Department plans to add additional Chinese supercomputing entities to a trade blacklist.

Yen narrative remains unchanged

Nikkei discussed how elevated verbal intervention is still failing to change market views that actual FX intervention remains unlikely. Although the yen strengthened Friday after a meeting between BOJ Governor Kuroda and Prime Minister Kishida, the story quoted a currency dealer suggesting that many participants believe that the current weakening of the yen is based on fundamentals, such as the Japan-US interest rate gap, so the effects of verbal intervention will not last long. Articles have repeatedly noted a high bar for direct action and BOJ's staunch commitment to maintaining low rates. Separate Nikkei editorial remarked policymakers may be resigned to current market forces amid broader dollar strength. Potential catalysts seen only coming from the US via market acceptance of peak inflation. Also some suggest President Biden may dial back the inflation-fighting stance after midterm elections.

China monetary data softer than expected

New loans were CNY1.25T in August, below consensus CNY1.50T and follows CNY679B in the previous month. Sequential rebound was largely expected due to seasonal factors. Strength driven by corporate demand, while a relatively soft bounce in household credit posed the main source of concern, confirming weakness in the residential mortgages and property market. Outstanding loans grew 10.9 per cent y/y vs consensus and prior month's 11.0 per cent. Ongoing attention on pickup in money supply -- M2 rose 12.2 per cent vs consensus 12.1 per cent and prior 12.0 per cent -- outpacing lending growth and feeding the "liquidity trap" narrative. Total social financing was CNY2.43T vs consensus CNY2.08T and CNY756.1B in July, though year-ago growth slowed to 10.5 per cent y/y vs prior month's 10.7 per cent. Shadow banking was the notable driver, while press noted prior stimulus announcements may boost government bond issuance going forward.

China's Covid restrictions extending to more parts of the country

China's Covid outbreak continues to spread to more cities after multiple Covid infections were discovered at a top media school in Beijing, prompting a lockdown of Communication University of China on Friday. All cases were found in quarantine, but other schools have also recorded Covid infections, sparking concerns about on-campus transmission. Comes after Beijing recently restricted entry and exit into the city, aiming to minimise risk of community transmission ahead of Party Congress in October. Restrictions have tightened in other parts of the country with Chengdu's lockdown extended last week and curbs in place in Shenzhen. Concerns China's Covid outbreaks are spreading to more economically important regions prompted fresh downgrades to GDP projections last week with Nomura tipping growth of 2.7 per cent in 2022 vs its prior estimate of 2.8 per cent.

Company news

Rural Funds Management, as responsible entity of Rural Funds Group (ASX:RFF), has entered an agreement to lease up to 3,000 ha of macadamia orchards for 40 years to a company managed by The Rohatyn Group (TRG) on behalf of a joint venture between TRG and a global institutional investor. The lease will incorporate orchards in Maryborough, Bundaberg and Rockhampton. The agreement is for an initial 1,200 ha, and an additional 1,800 ha in FY24, subject to completion of the water supply for the Rockhampton orchards. RFM and its wholly-owned subsidiary RFM Macadamias will provide orchard development and management services. Shares are trading 0.39 per cent higher at $2.565.

Altech Chemicals (ASX:ATC) has provided an update for its Silumina Anodes project in Saxony, Germany. The company recently announced late last year its game-changing technology of incorporating high-capacity high-purity alumina coated silicon and graphite in lithium-ion batteries, and recently completed a Preliminary Feasibility Study for the construction of a 10,000tpa Silumina Anodes plant in Saxony, Germany, that includes an NPV of US$507M. Altech is in the race to get its patented technology to market. To support the development, Altech has commenced construction of a pilot plant adjacent to the proposed project site to enable the qualification process for its Silumina Anodes product. The pilot plant will produce 120kg per day of the Silumina Anodes product, which will then be provided to selected potential end users for product testing. Shares are trading 3.28 per cent higher at 6.3 cents.

RareX (ASX:REE) has reported positive outcomes from a scoping study completed on its 100 per cent owned Cummins Range Rare Earths Project located in the Kimberley region of WA. The Scoping Study was led by Primero with support from mining plus among other leading consultancies. Shares are trading 3.39 per cent higher at 6.1 cents.

TechGen Metals (ASX:TG1) has confirmed a gold discovery at its John Bull Gold Project, NSW, where a maiden RC drilling program of seven holes was recently completed. The John Bull Gold Project is located within the New England Orogen in northern New South Wales. The drilling program was the first drilling ever to be completed within the project area. Ashley Hood, Managing Director, commented: “A new gold discovery from the surface has been confirmed by assay results from the maiden drilling program... This is exactly what we hoped for, another exceptionally broad zone of mineralisation with higher grade intercepts." Shares are trading unchanged at 20.5 cents.

Anax Metals (ASX:ANX) has announced a revised JORC Mineral Resource for the Salt Creek Deposit at the Whim Creek Copper-Zinc Project located at Port Hedland in the West Pilbara Region of Western Australia. The company’s Managing Director, Geoff Laing, said “the significant increase in copper and zinc resources at Salt Creek demonstrates, once again, the fantastic opportunity this Pilbara project offers. Salt Creek remains open at depth with significant exploration upside and we look forward to evaluating the underground and growth potential at this high grade deposit”. Shares are trading 6.15 per cent higher at 6.9 cents.

Commodities and the dollar

Gold is trading at US$1717.01 an ounce.
Iron ore is 3.9 per cent higher at US$103.65 a tonne.
Iron ore futures are pointing to a rise of 3.74 per cent.
One Australian dollar is buying 68.47 US cents.