ASX enjoys continued relief rally: Aus shares 1.47% higher at lunch

The ASX is continuing its relief rally today off the back of continued gains from US stocks overnight. All 11 sectors are trading in positive territory.

At noon, the S&P/ASX 200 is 1.47 per cent or 98.70 points higher at 6798.00.

The SPI futures are pointing to a rise of 87 points.

Best and worst performers

The best-performing sector is Information Technology, up 3.49 per cent. The sector with the fewest gains is Consumer Staples, up 0.03 per cent.

The best-performing stock in the S&P/ASX 200 is REA Group (ASX:REA), trading 8.70 per cent higher at $131.10. It is followed by shares in Block (ASX:SQ2) and James Hardie Industries (ASX:JHX).

The worst-performing stock in the S&P/ASX 200 is New Hope Corporation (ASX:NHC), trading 3.58 per cent lower at $6.46. It is followed by shares in Sayona Mining (ASX:SYA) and Pilbara Minerals (ASX:PLS).

Asian markets

Shares in the Asia-Pacific are trading higher this morning after Wall Street’s rally for a second day.

The Japanese Nikkei 225 is 0.66 per cent higher in early morning trade, going back above the 27,000 level, while the Topix has added 0.72 per cent.

In South Korea, the Kospi has so far advanced 1.5 per cent and the Kosdaq has gained 1.36 per cent.

On the economic front, inflation in South Korea slowed slightly in September, according to official data released Wednesday. The CPI print came in at 5.6 per cent, compared with the 5.7 per cent consensus. Prices rose 5.7 per cent in August. September’s reading marks a second month of softening in inflation, and the slowest growth in four months.

Mainland China markets remain closed for the Golden Week holiday.

OPEC+ to discuss crude output cut of up to 2 million barrels per day

OPEC+ producers will meet later on Wednesday to discuss reducing crude output by up to 2 million barrels per day (bpd), which respresents by far the biggest cut to output since early in the pandemic (Bloomberg). However, delegates say producers may settle for a smaller cut of 1.1-5 million bpd while FT cited people with knowledge of the discussions who said reductions could be phased in over several months. There is some uncertainty over the ultimate impact of the cut given several nations are already producing below their quotas. However, discussions are leaning towards making cuts from existing production. The developments caused angst in the US, with Reuters reporting the Biden administration is pushing OPEC+ nations not to proceed with a deep output cut. This could also risk a tit-for-tat response from the US amid reports that the Biden administration is weighing curbs on fuel exports (Reuters).

Japanese banking leaders worry about eventual BOJ exit, fiscal ramifications

Bloomberg cited comments from banking chiefs at a Nikkei forum on Tuesday, discussing concerns about preparations for the eventual end to Bank of Japan (BOJ) easing and underscoring the importance of effective BOJ communications. Mizuho CEO Kihara raised lack of trader experience with tightening cycles as the main issue given rates have been depressed for years. MUFG CEO Kamezawa noted banking sector profitability has been under pressure and wants the BOJ to find a "smooth landing" by paying attention to various side effects. SMBC's Ohta spoke of fiscal implications if Japan's credit rating is downgraded, which would probably trigger cuts to banks as well, restricting access to dollar funding and hampering overseas lending. Daiwa Securities' Nakata echoed calls for effective communication from BOJ to achieve a soft landing.

Kishida, Biden to boost Japan-US deterrence over North Korea launch

After North Korea launched a ballistic missile that flew over the Japanese archipelago, the first in five years, Prime Minister Kishida and US President Biden agreed over a phone conference to boost the deterrence and response capabilities of the bilateral alliance (Kyodo). The report affirmed the two allies and South Korea will step up coordination at the UN Security Council toward the complete denuclearisation of North Korea. Separately, Defence Minister Hamada told Lloyd Austin that Japan will substantially strengthen its defence without ruling out any option, including counter strike capability. The story noted South Korean lawmakers briefed by intelligence officials last week said the window for North Korea's possible seventh nuclear test could be between China's Communist Party congress this month and US midterm elections in November.

Company news

Latin Resources (ASX:LRS) has confirmed the discovery of a new lithium mineralised zone some 500m west of the Colina prospect, and also provided an update on the program of resource definition drilling and other studies currently ongoing at the company’s 100 per cent owned high-grade Colina Lithium Prospect. Latin Resources’ Exploration Manager Tony Greenaway commented: “The significance of these latest results from hole SADD033 cannot be understated. They confirm that we have a second zone of high-grade lithium bearing pegmatite only 500m to the west of the main Colina resource drilling." Shares are trading up 4.8 per cent to 11 cents.

American Rare Earths (ASX:ARR; OTCQB:ARRNF; FSE:1BHA) announced this morning that exploration drilling will commence today. 36 reverse circulation holes will be drilled to define a maiden JORC resource at the 100 per cent owned Halleck Creek project. An additional 19 holes have been permitted to enable the program to be further expanded. Drilling is expected to be completed by Mid-December this year. Managing Director and CEO Chris Gibbs commented: “We’re very excited to commence this drilling program to advance the massive Halleck Creek Project. Further encouragement for the progress of Halleck Creek came from the test work results on ore from our large-scale La Paz project, announced last week. These are significant for both projects because of the similarities between the ore. We’ve also initiated metallurgy test work specifically for Halleck Creek ore and look forward to providing an update on this as soon as results are available”. Shares are unchanged at 22 cents.

Demetallica (ASX:DRM) today reported completion of two drill holes targeting the Mawson and Wills copper targets at Demetallica’s 100 per cent owned Peake and Denison project, SA. Peake and Denison is a joint venture project funded by OZ Minerals (ASX:OZL) where Demetallica is manager and operator. The company noted how the highly encouraging visible copper mineralisation has been intersected at both sites. These results amplify the JV’s view that Peake and Denison offers immense untapped potential as a completely new copper exploration frontier along the north-eastern edge of the Gawler Craton. Shares are trading 14.3 per cent higher at 32 cents.

Commodities and the dollar

Gold is trading at US$1722.80 an ounce.
One Australian dollar is buying 65.00 US cents.