Strict Chinese measures dampen market sentiment: ASX up 0.29% at lunch

US markets finished higher on Friday after a volatile session following the release of the October jobs report, which showed better-than-expected hiring, while the unemployment rate climbed to 3.7 per cent from a two-year low of 3.5 per cent.

The local sharemarket is marginally higher. Materials are outperforming as commodity prices rallied on Friday and the US dollar pulled back against most major currencies. BHP’s NYSE listed shares closed almost 10 per cent higher on Friday. BHP’s rally has not been mirrored here, with the index heavyweight up 4 per cent at lunch.

Market sentiment has been dampened after China has quashed speculation it will pivot on its COVID zero policy. Goldman Sachs’ economist Hui Shan believes that the reopening of China is still some way off and expects a reopening in the second quarter of next year.

At noon, the S&P/ASX 200 is 0.29 per cent or 19.90 points higher at 6,912.40.

The SPI futures are pointing to a rise of 23 points or 0.33 per cent.

Best and worst performers

The best-performing sector is Materials, up 2.82 per cent. The worst-performing sector is Information Technology, down 1.61 per cent.

The best-performing stock in the S&P/ASX 200 is Capricorn Metals (ASX:CMM), trading 9.14 per cent higher at $3.82. It is followed by shares in De Grey Mining (ASX:DEG) and Evolution Mining (ASX:EVN).

The worst-performing stock in the S&P/ASX 200 is Coronado Global Res (ASX:CRN), trading 8.59 per cent lower at $2.08. It is followed by shares in ANZ Banking Group (ASX:ANZ) and Westpac Banking Corporation (ASX:WBC).

Asian news

Shares in the Asia-Pacific have risen in early Monday trading. China is slated to release trade data later in the day, while Apple suppliers in the region will be in focus as the company warned Covid restrictions in China are hurting iPhone production.

The Nikkei 225 in Japan is so far 0.75 per cent higher and the Topix has gained 0.75 per cent. In South Korea, the Kospi is up 0.86 per cent.

MSCI’s broadest index of Asia-Pacific shares is 0.4 per cent higher.

China Covid restrictions force Apple to lower outlook for iPhone shipments

Apple has announced that it expects to lower iPhone 14 Pro and iPhone 14 Pro Max shipments due to Covid restrictions in Zhengzhou, forcing its assembly facility to operate at a significantly reduced capacity (Bloomberg). While deliveries of iPhone 14 Pro are currently listed for late November/early December, Apple said customers will have to wait longer to receive their products. The slow down in the development of the iPhones are not surprising, after the zone around Foxconn's Zhengzhou plant, which has been affected by recent worker exodus, was put in lockdown last week until 9 November (though Foxconn announced today it expects Zhengzhou plant to resume full production). Foxconn accounts for 70 per cent of iPhones shipped globally, with most of the phones produced at its Zhengzhou plan. Reuters recently cited a person with knowledge of the matter who noted production of iPhones at the Zhengzhou plant could fall by as much as 30 per cent.

Synchronised policy tightening nearing an end, causing more problems for economies and markets

More central banks are beginning to signal a slowdown in the pace of tightening through diverging on how much to pull back (Bloomberg). The Fed rate path has steepened in the wake of Chairman Jerome Powell's hawkish remarks made last week with terminal rate projections rising above 5 per cent. At the same time, other central banks have already slowed pace of rate hikes or signalled lower terminal rates than markets were pricing in. The Credit Suisse index showed dovish central bank surprises that recently overtook hawkish surprises. This is largely a recognition that while inflation is still well above many central banks' targets, their economies have relatively higher borrowing costs and are more heavily indebted, making them more sensitive to rising rates. At the same time, policy divergence with the Fed threatens to put more upward pressure on the dollar, compounding issues for developing economies with large dollar-denominated debt and advanced nations where imports are priced in USD.

Company news

Novatti Group (ASX:NOV) announced that its dedicated banking subsidiary International Bank of Australia, has been granted a Restricted Authorised Deposit-taking Institution licence by Australia’s banking regulator APRA. The banking business will launch as the International Bank of Australia. Managing Director of Novatti, Peter Cook, said: “Being granted a restricted banking licence is a very significant milestone in the delivery of Novatti’s long term strategy, and is the culmination of several years of investment and development. We see banking services as significant across card issuing, merchant acquiring, billing and cross-border payments as it underpins the infrastructure and capability to Novatti’s core payments business while also giving us the ability to increase margins. The delivery of this licence, and now the launch of International Bank of Australia, has therefore formed a core part of Novatti’s growth strategy for so long. In addition, the bank has the strong advantage of being able to leverage Novatti’s existing payments ecosystem and global footprint to help win customers quickly.” Shares are trading 54 per cent higher at 29 cents.

Sustainable rare earths and phosphate developer RareX (ASX:REE) announced that it has executed a binding Memorandum of Understanding (MoU) with Ord River District Co-operative Ltd (ORDCO) to progress commercial off-take and product development opportunities for phosphate products from its 100 per cent-owned Cummins Range Project in WA as outlined in the recent scoping study. Under the terms of the MOU, the parties have agreed to discuss and negotiate the terms of a binding offtake agreement and distribution agreement, and to jointly develop a product roadmap for the phosphate products to be produced from the Cummins Range Rare Earths and Phosphate Project. Commenting on the MOU, RareX Managing Director, Jeremy Robinson, said: “In choosing to collaborate with ORDCO, we are pleased to be working with local communities in the region where we operate as part of a sustainable venture that could deliver significant benefits to stakeholders across the district.” Shares are trading 7.9 per cent higher at 6 cents.

Altech Chemicals (ASX:ATC) announced that it has designed and launched the CERENERGY Sodium Alumina Solid State (SAS) 60 KWh battery pack (ABS60), with its joint venture with Fraunhofer. The battery has been designed for the renewable energy and grid storage market, and each battery pack will contain 240 cells. The design is totally weatherproof, which allows for outdoor installation. Shares are trading 7.5 per cent higher at $0.12.

North Stawell Minerals (ASX:NSM) has been successful in its application with Australia’s national science agency, CSIRO and has been granted a Kick-Start voucher to the amount of $50,000. The project will identify possible gold-mineralisation pathways interpreted from geophysics data -- with potential to significantly accelerate exploration focus and success using regional data. Shares are trading 8.3 per cent higher at 11 cents.

Arovella Therapeutics Ltd (ASX:ALA) announced today that the European Patent Office has issued a notification of Intention to Grant a patent for the iNKT cell therapy platform which is under licence to Arovella from Imperial College Innovations. The patent application, which covers the manufacturing of CAR-iNKT cells, is expected to proceed to grant in early 2023 following completion of the grant formalities. Once granted, the patent will have a maximum term that will expire on 28 February 2039. Arovella’s CEO and MD, Dr Michael Baker, commented: “Receiving the notice that this European patent application will proceed to grant is an excellent milestone for the technology, and we are excited to continue developing the therapy to demonstrate the value of our platform and to have a positive impact on the lives of many cancer patients.” Shares are trading unchanged at 3 cents.

Magmatic Resources (ASX:MAG) has provided an update on the progress of the ongoing drilling program at its 100-per cent owned Myall Project. The third diamond hole at Corvette has delivered the best Cu-Au-Mo intercept to date from immediately below the base of cover. Commenting on the latest drilling results from the Corvette Prospect, Magmatic Resources’ Managing Director Dr Adam McKinnon said: “After a period of exceptionally wet weather in the region, I am pleased that we’ve been able to recommence drilling so quickly at the Corvette Prospect. The copper, gold and molybdenum results continue to get better and better, and I’ve been very impressed with the exceptional widths of mineralisation returned from holes 22MYDD415, 416 and now 417. The latest assay results highlight the immense potential of the Corvette Prospect and the greater Myall project area to deliver a large copper-gold porphyry system, with all four holes completed to date (inclusive of abandoned hole 22MYDD414) intersecting strong mineralisation immediately from the base of cover.” Shares are trading 18.2 per cent higher at 13 cents.

Trek Metals (ASX:TKM) has confirmed the presence of high-grade lithium within an extensive, undrilled pegmatite system at its 100 per cent-owned Tambourah Lithium Project (E45/5839 & E45/5484) in the Pilbara region of Western Australia. The Historic rock chip results highlight the presence of a large, fractionated LCT pegmatite swarm prospective for lithium, with good correlation to both the previously reported anomalous stream sediment data and mapped pegmatites on the ground. In response, Trek CEO Derek Marshall said, “confirming very high-grade lithium at surface in multiple spodumene-bearing pegmatite dykes is about as good as it gets for this stage of exploration, highlighting the enormous prospectivity of the mineralised system at Tambourah. We have ticked another major box towards making a greenfields lithium discovery.” Shares are trading 40.6 per cent higher at 9 cents.

Splitit Payments (ASX:SPT) announced that it has signed an agreement with Checkout LLC, the cloud-based payments service provider to deliver an integrated instalment payments solution, as well as reselling Splitit through its network of merchants and marketplaces. The partnership will support Splitit’s Instalments-as-a-Service platform to be adopted by Checkout.com’s extensive network of merchants and marketplaces, making it easier for those merchants and marketplaces to adopt the unique Splitit solution, and provide Splitit with a strengthened global product offering to take to the enterprise market. In response, Splitit CEO Nandan Sheth stated: “The simplified integration is anticipated to provide Splitit the ability to serve global enterprise merchants better while we work with Checkout.com to jointly pursue new and exciting opportunities in ecommerce.” Shares are trading 3.9 per cent higher at 14 cents.

Arafura Rare Earths (ASX:ARU) announced today the signing of a binding offtake agreement with its key foundation offtake partner, South Korean based Hyundai Motor Company. Kia Corporation can make orders under the Offtake Agreement in its own right. The Offtake Agreement is for the supply of NdPr from the Company’s Nolans Project to Hyundai over a seven-year term. Arafura’s Managing Director, Gavin Lockyer, said: “We are delighted to have concluded negotiations to execute our first binding offtake agreement which includes the exercise of the option provided in the MoU to take the full offtake volume of 1,500 tpa in relation to the Nolans Project. This establishes the foundation for a long-term partnership, and we are proud to have committed to supplying NdPr to Hyundai, a respected global automotive leader.” Shares are trading 11.5 per cent higher at 34 cents.

Musgrave Minerals (ASX:MGV) reported today further high-grade gold assay results from reverse circulation and diamond drilling along the Break of Day Trend at the White Heat-Mosaic deposit. Musgrave Managing Director Rob Waugh said: “These are another strong set of results and confirm the exceptional high grades in the near-surface gold mineralisation at White Heat-Mosaic. The deposits, including White Heat-Mosaic along the high-grade Break of Day trend, will be a cornerstone of future development of the Cue Gold Project.” Shares are trading 7 per cent higher at 23 cents.

Telix Pharmaceuticals (ASX:TLX) announced a highly positive top-line result from the pivotal Phase III ZIRCON study of its investigational renal (kidney) cancer positron emission tomography (PET) imaging agent. The study has met its co-primary and secondary endpoints, in which the results delivered co-primary endpoints of 86 per cent sensitivity and 87 per cent specificity and 93 per cent positive predictive value considerably exceeding sensitivity and specificity targets. In response, Dr Colin Hayward, Chief Medical Officer at Telix said, “It could optimise surgical intervention – particularly in the incidence of very small renal masses. These results provide confidence that TLX250-CDx is an important tool not only for initial diagnosis but potentially also for active surveillance and disease staging.” Shares are trading 1.1 per cent lower at $6.84.

Miramar Resources (ASX:M2R) advised that aircore drilling at the company’s 100 per cent-owned Whaleshark Cu-Au Project has outlined large copper and multielement anomalies suggestive of buried iron oxide copper gold mineralisation. Miramar’s Executive Chairman, Mr Allan Kelly said: “The first pass aircore drilling at Whaleshark has successfully outlined large multi-element anomalies in several elements generally associated with IOCG mineralisation. The scale, magnitude and suite of elements seen at Whaleshark is very similar to the large Ernest Henry IOCG deposit in Queensland, which is our target at Whaleshark.” Shares are trading unchanged at 10 cents.

Brookside Energy (ASX:BRK) provided an update today on its continued acreage acquisition activities within its SWISH Area of Interest in the core of the southern SCOOP Play in the world class Anadarko Basin. Commenting on this announcement, Managing Director, David Prentice said: “We are delighted to report on this very significant development in the successful execution of our land and leasing efforts in the core of the highly sought after Sycamore-Woodford trend in southern SCOOP. “It is a credit to our team in Oklahoma, that we have been able to secure operations on a fourth DSU in what is an extremely competitive environment, adding to our already strategically important position at a time when M&A and drilling and development activity is on the rise.” Shares are trading 8.3 per cent higher at 1 cents.

Westpac Banking Corporation (ASX:WBC) today provided an update on Westpac’s 2022 Full Year Result. Westpac CEO, Peter King, commented: “In 2022, we’ve delivered a solid financial result and made steady progress on our strategic priorities. We’ve built positive momentum and positioned the company for the future. I’m pleased with our overall performance. We sharpened our focus on core banking, reduced costs, and improved service to customers. Westpac returned to growth in our key segments of Australian mortgages and business lending. In the second half, our banking divisions delivered strong growth in core earnings on the back of good cost and margin management. Our balance sheet is in good shape across capital, liquidity and asset quality and we’ve determined a final, fully franked ordinary dividend of 64 cents per share. After the work of the past two years, Westpac is now a simpler, stronger bank. We’re continuing to get our costs down, we’re simplifying our operations and our program of co-locating branches in similar locations is removing duplication. At the same time, we are investing in the right places, such as the launch of our digital mortgage and new personal finance management tools in the Westpac app. Our year-on-year results are solid and over the past six months in particular we have demonstrated momentum, with core earnings (ex-notable items) up 12 per cent and our net interest income up 7 per cent. Margins increased 5bps in the second half to 1.90 per cent but they remain below historical levels." Shares are trading 3.7 per cent lower at $23.3.

Commodities and the dollar

Gold is trading at US$1672.96 an ounce.
Iron ore is 5.1 per cent higher at US$88.05 a tonne.
Iron ore futures are pointing to a rise of 4.01 per cent.
One Australian dollar is buying 64.33 US cents.