Resurgent ASX rallies: Aus shares 1.8% higher at noon

At noon, the S&P/ASX 200 is 1.82 per cent or 117.70 points higher at 6579.70.

The SPI futures are pointing to a rise of 116 points.

Inflation data out today from the Australian Bureau of Statistics saw inflation rise by 6.8 per cent in the year to August, slightly lower than the 7 per cent recorded in July. The ABS will begin reporting inflation data monthly from October, to allow economists to keep better track of inflation.

Best and worst performers

The best-performing sector is Energy, up 3.49 per cent. The sector with the fewest gains is Consumer Staples, up 0.35 per cent.

The best-performing stock in the S&P/ASX 200 is Premier Investments (ASX:PMV), trading 12.53 per cent higher at $23.26. It is followed by shares in Sayona Mining (ASX:SYA) and Coronado Global Res (ASX:CRN).

The worst-performing stock in the S&P/ASX 200 is IRESS (ASX:IRE), trading 15.78 per cent lower at $8.86. It is followed by shares in Link Administration Holdings (ASX:LNK) and Cromwell Property Group (ASX:CMW).

Asian markets

Shares in Asia-Pacific are mostly trading higher in Thursday morning’s session, following a rebound on Wall Street overnight. The rally in the US came after the Bank of England said it would intervene in the bond market to stabilise conditions.

Early trading sees the Nikkei 225 in Japan advancing 0.71 per cent and the Topix index currently 0.15 per cent higher.

In South Korea, the Kospi has presently gained 1.7 per cent and the Kosdaq has added 3.0 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan has added 0.72 per cent this morning.

Hong Kong’s Hang Seng index is currently trading up 1.85 per cent. In mainland China, the Shanghai Composite is trading around 0.58 per cent higher with the Shenzhen Component adding 0.77 per cent.

China Vanke subsidiary Onewo and Chinese EV maker Zhejiang Leapmotor Technology debuted in Hong Kong this morning, and are both among the largest initial public offerings this year.

New Zealand business confidence recovers from depressed levels

The New Zealand ANZ business confidence index lifted another 11 points to -37 in September from August levels, continuing a recovery from very depressed levels. Most activity indicators rose for a third month with investment and employment intentions, and profit expectations all improving. Inflation pressures remain elevated amid little change in cost expectations and pricing intentions. Residential construction outlook continues to deteriorate, though accompanied by a big drop in sector price intentions. ANZ noted the survey indicates demand has not yet rolled over in the face of higher rates, providing scope for RBNZ to continue tightening. Moreover, with inflation pressures yet to begin dissipating, it is forecasted that the central bank will hike the OCR closer to 5 per cent than the circa 4 per cent peak rate it modelled in August.

South Korea monetary authorities buy back $3.5B in bonds, may ban equity short selling

Seoul moved to support its ailing won and bolster its stock market late Wednesday, pledging to buy back government bonds worth KRW5T ($3.5B) this week to curb local yields rising to match US Treasuries (MaeilBusiness). BOK is to buy KRW3T of 3Y, FY and 10Y maturities while the Ministry of Finance will return payments on KRW2T ahead of maturity. Earlier this week, 3Y government bond yield reached a near-record high of 4.548 per cent with yields in other maturities also rising sharply. Moves are seen as indicative of won support which reached fresh 14-year lows against the dollar on Wednesday. In the second move, MaeilBusiness reported Financial Services Commission is moving to reactivate stock stabilisation funds last used during early days of the pandemic selloff, and may ban short selling used by institutions and overseas investors.

Japan PM Kishida to announce utilities relief

Nikkei cited a draft of Prime Minister Kishida's policy speech to be delivered to parliament 3 October, showing plans to provide private sector relief for rapid increases in electricity bills as part of broader stimulus measures to be detailed in October. Delivery options include direct cash handouts or subsidise power companies on price increases. The story noted that full subsidisation of last year's 10 per cent increase in electric utilities' retail sales would amount to ~JPY1.4T. This suggested the possibility of this measure remaining in place for some time in light of added factors such as high LNG prices and yen weakness. Kishida will outline three main priorities; tackle inflation and yen weakness, structural wage increases, and investment reforms to promote growth. Kishida originally announced an October package early this month, funded by ~JPY3.5T in existing reserves as a starting point with the possibility of a supplementary budget.

China prepares more policy support in Q4

Xinhua cited comments from Premier Li Keqiang at a working panel on economic stabilisation for Q4, calling for solid efforts to carry out the country's policies aimed at stabilising economic recovery. It noted it is the most important period in the year, and many policies are expected to play a greater role during the period. The endorsed allocation of special reloans and interest subsidies are to speed up the equipment upgrades in the manufacturing, service and social service industries. Part of the 2023 quota for the special-purpose bonds will also be front-loaded. Turning to housing, the story signalled formulation of region-specific measures to meet the demand from both first-time home buyers and home upgraders, and ensure timely deliveries of pre-sold homes. The People's Bank of China launched a CNY200B re-lending program for capital spending at a discounted interest rate.

PBOC issues stern warning to yuan speculators

Bloomberg reported the People's Bank of China issued a strongly-worded statement on Wednesday to warn against speculation after the yuan fell to its lowest level versus the US dollar since 2008. It noted "do not bet on one-way appreciation or depreciation of the yuan, as losses will definitely be incurred in the long term." Key market participants need to "voluntarily safeguard the stability of the market, and be firm when they need to iron out big rallies or declines in the exchange rate." It also added that it has "plenty of experience" to fend off external shocks and effectively guide market expectations. Reuters takeaways attributed the latest yuan weakness to broad dollar strength buoyed by safe-haven demand and a hawkish Fed. However, corporate demand for dollars is said to have been very strong, adding pressure on the yuan, as they delay yuan conversion to wait for better levels. This reiterated thoughts that authorities will allow further declines if driven by dollar strength, though will ensure orderly moves.

Fitch expects global copper production to grow over the next decade through ramp-up of new projects

Fitch Solutions Country Risk and Industry Research forecasts 7.3 million tonnes will be added to global copper production through 2031 as several projects in Chile, China and Congo come online. Fitch expects the global copper mine production will increase by an average annual rate of 3.2 per cent over 2022-31, with annual output rising from 21.9mnt in 2022 to 29.2mnt by 2031 boosted by elevated copper prices and a positive demand outlook. Additionally, Fitch anticipates copper prices to average $8,400 a tonne in 2023 and $11,500 a tonne by 2031 as a long-term structural deficit emerges due to very strong long-term demand outlook.

China's renewables growth boosts copper demand as traditional sectors falters

China's rapid build-up of clean energy is claiming more copper, supporting the market at a time when traditional sources of demand like housing are in the dumps. Copper imports are one of the few bright spots in an otherwise bleak picture for Chinese commodities consumption. CRU Group forecasts that China's copper demand will rise about 0.8 per cent this year to 15.55 million tons, with growth of more than 4 per cent from both autos and electricity transmission countering a 4 per cent decline in construction and a 2 per cent drop in consumer durables. The rapid growth in EV sales and the massive ramp up in renewable power are expected to make a relatively big contribution to copper demand (Bloomberg).

Company news

Regenerative medicine company Orthocell (ASX:OCC) today announced positive results from the crossover patient extension arm of its randomised, multicentre, controlled rotator cuff tendon clinical study. This additional data supports the original randomised controlled RC Study results, which demonstrated that OrthoATI is a safe and effective treatment for patients suffering from rotator cuff tendinopathy with intrasubstance tendon tear compared directly to the standard of care. Orthocell Managing Director, Paul Anderson, said “We are delighted with the crossover patient study results clearly demonstrating that OrthoATI is more effective than steroid injection for treatment of rotator cuff tendinopathy with intrasubstance tendon tear. This is an important validation for OrthoATI and the Company. We are now in a very strong position to progress our US commercialisation strategy to deliver the first injectable cell therapy in orthopaedics that truly addresses the cause of degeneration and returns patients to full use of their chronically damaged tendons.” Shares are trading up 6.17 per cent to 43 cents.

Junior explorer Castle Minerals (ASX:CDT), today advised that it has received encouraging intercepts from the first 23 holes of a recently completed 52 hole, drill program at its flagship Kambale Graphite Project in Ghana. Several holes returned thick, high-grade and multiple intercepts some of which fall outside of the existing Mineral Resource envelope and with many also relatively close to the surface. Castle Managing Director, Stephen Stone, commented: “The interim assay results from 23 holes of the recently completed 52-hole, RC drilling program at the Kambale graphite project, confirm that it is evolving as a very credible and still not yet fully defined deposit. It’s an exciting time for Kambale especially given the projected increasing demand and under supply of graphite for at least the remainder of this decade.” Shares are trading 3.7 per cent higher at 3 cents.

Growing multi-asset WA lithium company Global Lithium Resources Limited (ASX:GL1) this morning announced it has signed a Non-Binding Memorandum of Understanding (MOU) with leading Korean battery manufacturer SK On Co., Ltd (SKO) to explore a range of future business opportunities. SKO is one of the fastest-growing battery manufacturers in the industry, with battery production facilities operating in countries including the US, China, Hungary and Korea. SKO supplies batteries to global automakers, including Ford Motor Company, Hyundai Motor Company and Volkswagen. SKO, an affiliate of Korea’s second-largest conglomerate SK Group, has a strong order backlog. Under the terms of the MOU, Global Lithium and SKO intend to explore future business opportunities including the potential development of downstream integrated battery grade lithium assets for an initial two-year period. Shares are trading up 8.8 per cent to $2.34.

Evolution Energy Minerals (ASX:EV1) today announced the execution of a binding term sheet with YXGC with regards to the downstream processing of coarse flake concentrate from the Company’s Chilalo Graphite Project which is located in southeast Tanzania. The Term Sheet envisages, subject to positive results and approvals, the establishment of a processing facility for the processing of 25,000tpa of coarse flake concentrate into high-value graphite products. The company has undertaken a preliminary review of suitable locations, with a focus on Europe and the Middle East. Phil Hoskins, Evolution’s MD, commented: “Evolution’s strategy is grounded in sustainably producing graphite products for the modern economy. YXGC is a global leader in the processing of coarse flake graphite to manufacture high-value products such as graphite foils. Combining Chilalo’s high-quality coarse flake graphite with YXGC’s experience, technology and know-how will enable Evolution to capture additional margins and maximise the value of Chilalo." Shares are trading up 15 per cent to 27 cents.

Raiden Resources (ASX:RDN) announced today that it has intercepted visual massive, semi-massive, and disseminated mineralisation in multiple drill holes at its flagship Mt Sholl Project. Mr Dusko Ljubojevic, Managing Director of Raiden commented: “We are highly encouraged by these early drill intercepts. All four of the initial drill holes are intercepting visible Nickel and Copper sulphide mineralisation on the B2 deposit and in line with our modelling. The program will continue testing the remainder of the B2 deposit along the strike before we drill to confirm the mineralisation on the B1 and A1 deposits. Other than providing confirmation of historical results, the drilling will ensure we obtain rock density information, as well as, material for future metallurgical studies and resource modelling all of which will be used to advance the project.” Shares are trading up 37.5 per cent to 1 cent.

Commodities and the dollar

Gold is trading at US$1656.57 an ounce.
Iron ore is 2.2 per cent lower at US$95.50 a tonne.
Iron ore futures are pointing to a rise of 1.04 per cent.
One Australian dollar is buying 64.94 US cents.