ASX edges higher, whilst the RBNZ pulls off a massive interest rate hike: ASX closes 0.7% up

Market Reports

by Peter Milios

The RBNZ has signalled further rate hikes after lifting rates by 75 basis points to 4.25 per cent and states that the cash rate needs to "reach a higher level, and sooner than previously indicated" in order to bring inflation within control.

RBNZ governor Adrian Orr highlights "core consumer price inflation is too high, employment is beyond its maximum sustainable level, and near-term inflation expectations have risen".

Iron ore futures have extended their losses due to the rising China COVID cases sparking fears of further lockdown restrictions.

The January iron ore on China’s Dalian Commodity Exchange decreased by 2.2 per cent to 719.5 yuan ($US100.68) a tonne.

Dalian coking coal and coke both dipped 0.4 per cent.

Overall, all sectors except Information Technology and Real Estate have finished higher.

At the closing bell, the S&P/ASX 200 was 0.70 per cent or 50.50 points higher at 7231.80.


The Dow Jones futures are pointing to a fall of 1 points.
The S&P 500 futures are pointing to a fall of 2.75 points.
The Nasdaq futures are pointing to a fall of 28.75 points.
The SPI futures are pointing to a rise of 49 points when the market next opens.

Best and worst performers

The best-performing sector was Utilities, up 1.56 per cent. The worst-performing sector was Information Technology, down 1.05 per cent.

The best-performing stock in the S&P/ASX 200 was Brainchip (ASX:BRN), closing 6.92 per cent higher at $0.70. It was followed by shares in Chalice Mining (ASX:CHN) and Whitehaven Coal (ASX:WHC).

The worst-performing stock in the S&P/ASX 200 was WiseTech Global (ASX:WTC), closing 6.66 per cent lower at $53.84. It was followed by shares in The Star Ent Group (ASX:SGR) and Growthpoint Properties Australia (ASX:GOZ).

Asian News

Asian equities mixed Wednesday. Mainland China markets are underperforming while Hang Seng is extending gains as a tech stocks firm. Korea, and Taiwan markets in positive territory. Nikkei closed for Labor Thanksgiving holiday.

So far, Hong Kong's Hang Seng has gained 0.42 per cent and China's Shanghai Composite has lost 0.19 per cent.

RBA Governor Lowe sees policy challenges from structurally higher inflation:
In a speech late Tuesday, RBA Governor Lowe reiterated more rate hikes expected with household spending, wage and price setting behaviour and global economy to determine policy. Did not rule out further 50 rate hikes but also open to keeping policy unchanged. Lowe reasoned inflation is expected to fall over coming years as supply disruptions ease, commodity prices stabilise and higher rates lower aggregate demand. Contrasted situation in Australia where wage growth is consistent with inflation returning to target, to other countries experiencing faster wage growth. Highlighted longer term dynamics likely to affect global inflation, including from deglobalization, ageing demographics, climate change and energy transition. These factors are expected to increase the prevalence of supply shocks, making inflation and the policy environment more difficult for central banks.

OECD projects softer 2024 GDP growth in China, Japan:
The OECD economic outlook report showed tweaks to global GDP forecasts, now at 3.1 per cent in 2022 (vs prior 3.0 per cent) and 2.2 per cent in 2023 . New projections are looking for 2.7 per cent in 2024. While the US and EU are expected to recover moderately in 2024 from a near-stall in 2023 growth, momentum in China and Japan seen waning, though following a lesser slowdown. Still, China’s GDP growth is expected at 4.1 per cent in 2024, following 4.6 per cent in 2023 and 3.3 per cent in 2022. Noted, activity is disrupted by recurring lockdowns. With weaker housing investment also remaining a significant headwind, growth in 2023 and 2024 will be sustained by infrastructure investment and other measures to mitigate the correction in the real estate sector. Japan is hindered by higher energy prices and slower global growth, while fiscal policy is set to tighten in 2024. South Korea also saw slowing due to weak external demand, modest disposable income growth and soft housing market. Regional inflation picture mixed, ranging from elevated pressures in South Korea, while China remains benign.

Shanghai restricts entry into the city amid worsening Covid outbreaks in other regions:
China's daily Covid infections nearing April peak with several cities tightening restrictions and some areas reimposing or extending lockdowns. Shanghai moved to restrict entry into the city, requiring new arrivals to avoid restaurants, shopping malls and entertainment for five days from Thursday (Bloomberg). Arrivals will also be subject to additional testing requirements. Elsewhere, Beijing is battling record high infections with residents urged to stay at home and present negative tests before entering public buildings. Falling mobility across economically-important regions expected to suppress economic growth before any potential reopening in 2023. Even then, reopening is expected to be gradual and nonlinear, reflecting policymaker reluctance to relax curbs too quickly given inadequate medical resources to deal with expected spike in hospitalizations, as well as low vaccination rates among elderly.

China leading global IPOs this year:
Reuters reported China is leading global IPO activity this year, supported by easy monetary policy and lack of clarity on access to offshore capital markets. Refinitiv data showed China IPOs raised $71.2B. While lower than $98.5B a year earlier, the amount is much higher than US ($17.3B) and Europe ($16.4B). Also noted relative stability in China markets, in contrast to the volatility elsewhere. Chinese equity funds have seen inflows of $21.3B since April while global equity funds logged outflows of $144B. Chinese offerings have been largely confined to the domestic market as deals in western markets tumbled, attributed to concerns over China's Covid lockdowns, growth worries, ongoing audit disputes with the US, and uncertainties over offshore listing rules. Going forward, UBS noted Hong Kong primed for resurgence given a strong IPO pipeline, while US listings will take more time amid uncertainty over US-China relations.

Singapore trims FY GDP forecast after slower than expected Q3:
Singapore's economy expanded by less than initially estimated in Q3 on weaker-than-expected manufacturing, largely caused by slowdown in the eurozone on its energy crunch; and property sector difficulties, Covid restrictions in China. Miss led Ministry of Trade and Industry to lower FY 22 forecast to around 3.5% from a range of 3-4% previously. GDP on a q/q basis expanded 1.1%, worse than the original 1.5% estimate; expanded 4.1% y/y in Q3 versus an advanced estimate of 4.4%. MTI said it forecast 2023 GDP growth in 0.5-2.5% range, weaker global outlook, higher interest rates and "disorderly market adjustments' ' could weigh on growth in Singapore's outward-oriented sectors, partially offset by return of tourism (BusinessTimes). Separate forecasts from Enterprise Singapore Wednesday showed total Singapore trade to grow 20% in 2022 from the original projection of 15-16%, dominated by oil and electronics (BusinessTimes).

Company News

Alligator Energy Limited (ASX:AGE) has announced that the additional resource drilling program has been completed at the Blackbush Deposit, Samphire Uranium Project, in South Australia. Drilling in the western channel extension has found some of the highest uranium grades recorded to date at the project. In response, Alligator’s CEO Greg Hall stated: “The mineralisation continuity and exceptional grades found around Blackbush West have been exciting to see and have continued to buoy our positive view of this Project.” Shares close 4.55 per cent higher at $0.046.

Netlinkz Limited (ASX:NET) announces that it has entered into an agreement with SpaceX for Netlinkz to be a non-exclusive global reseller of the Starlink satellite based high-speed, low-latency broadband internet. With the satellites positioned in low-Earth orbit, Starlink achieves significantly higher transmission speeds for its end users. Netlinkz CEO, James Tsiolis, commented: “The SpaceX Starlink distribution agreement enables Netlinkz to implement its sales strategy faster with a significantly larger footprint. Shares close 3.13 per cent higher at $0.033.

Chalice Mining Limited (ASX:CHN) provided an update on exploration activities at its Nickel-Copper-Platinum Project, located in Western Australia. The company has announced outstanding wide high-grade intersections, with the drilling demonstrating potential for material resource growth. Shares close 6.45 per cent higher at $4.95.

RareX Limited (ASX:REE) has provided an update on ongoing development and stakeholder engagement activities at its Cummins Range Rare Earth and Phosphate Project, located in the Kimberley region of Western Australia. The Company’s 2022 drilling program has concluded safely, laying the foundation for a major Mineral Resource upgrade targeted for Q1 2023. RareX Managing Director, Jeremy Robinson, said: "We are making material progress with the development and evolution of the Project on multiple fronts. Cummins Range is advancing rapidly towards the development phase and 2023 should see numerous key milestones achieved.” Shares close 6.38 per cent higher at $0.05.

Breaker Resources NL (ASX:BRB; the Company or Breaker) is pleased to advise of the results from the next 10 holes or wedges drilled as part of its resource development infill program on the primary Northern Flat Lodes beneath the Bombora Prospect at its Lake Roe Gold Project. Pleasingly, every hole/wedge in this latest batch has returned high-grade gold intercepts which validate the interpretation and further enhances the continuity within the ore system. Breaker’s acting CEO, Peter Cook said “These flat lodes keep expressing themselves as game changers, with the potential to significantly increase the overall grade at Bombora and to become an important part of any future underground development at Lake Roe gold operations.” Shares close 2.24 per cent lower at $0.305.

ABx Group (ASX:ABX) has announced the delivery of a maiden JORC compliant Mineral Resource Estimate for the Deep Leads – Rubble Mound channel area, the first estimate from within ABx’s rare earth elements (REE) project in northern Tasmania. The resource estimate anticipated to grow significantly as drilling proceeds. This maiden resource estimate covers less than 10 per cent of the 31.3km2 REE extension area yet to be drilled. Commenting on the mineral resource estimate, ABx Group Managing Director and CEO, Dr Mark Cooksey said, “It is a widespread province of clay-hosted REE mineralisation which has some exciting thick high grade REE channels that ABx intends to drill-out in January-March 2023, and I look forward to updating investors as we progress this campaign.” Shares close 3.57 per cent lower at $0.135.

Commodities and the dollar

Gold is trading at US$1734.59 an ounce.
Iron ore is 2.1 per cent lower at US$94.20 a tonne.
Iron ore futures are pointing to a fall of 2.3 per cent.
Light crude is trading $0.11 lower at US$80.84 a barrel.
One Australian dollar is buying 66.36 US cents.

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