Relaxation of Chinese Covid-19 restrictions: Aus shares close 0.3% higher

Market Reports

by Peter Milios

As a result of news that China will relax Covid-19 restrictions, commodities have seen an increase in their prices, resulting in Energy and Materials finishing the day 1.74 per cent and 1.62 per cent higher respectively.

The news has also meant that the Australian dollar has hit a three-month high. The dollar was buying US68.54 cents just after lunch today, representing its highest point since September.

Cryptocurrency exchange platform Swyft is firing roughly 35 per cent of its staff, equivalent to 90 staff members, after a massive drop in trading volume, following the collapse of FTX. "As a result, we have to prepare in advance for a worst-case scenario of further significant drops in global trade volumes during the first half of next year and the potential for more black swan-type events," Swyftx co-founder Alex Harper told staff in an email on Monday morning.

Overall, at the closing bell, the S&P/ASX 200 was 0.33 per cent or 24 points higher at 7235.60.


The Dow Jones futures are pointing to a fall of 25 points.
The S&P 500 futures are pointing to a fall of 5.25 points.
The Nasdaq futures are pointing to a fall of 17.75 points.
The SPI futures are pointing to a rise of 23 points when the market next opens.

Best and worst performers

The best-performing sector was Energy, up 1.5 per cent. The worst-performing sector was Utilities, down 1.07 per cent.

The best-performing large cap in the S&P/ASX 200 was Fortescue Metals Group (ASX:FMG), closing 6.86 per cent higher at $21.03. It was followed by shares in Meridian Energy (ASX:MEZ) and Rio Tinto (ASX:RIO).

The worst-performing large cap in the S&P/ASX 200 was Yancoal Australia (ASX:YAL), closing 5.64 per cent lower at $5.35. It was followed by shares in Pilbara Minerals (ASX:PLS) and IGO (ASX:IGO).

Asian news

Asian equities are advancing Monday.

The latest rally has been pushing Hang Seng to a three-month high with tech and property stocks outperforming. Mixed elsewhere, with Taiex the only other notable gainers. Japan is flat and Korean stocks turning lower.

So far, Japan's Nikkei has gained 0.01 per cent, Hong Kong's Hang Seng has gained 3.39 per cent and China's Shanghai Composite has gained 1.55 per cent.

Company news

Warrego Energy (ASX:WGO) today referred to its announcement last Friday that Hancock Energy had increased the offer price under its takeover bid for Warrego from $0.23 per share to $0.28 per share (Hancock Takeover Offer). The Warrego Board has assessed the revised Hancock Takeover Offer and has determined that it is a Superior Proposal compared to the revised scheme proposal from Beach Energy (ASX:BPT) announced by Warrego on 2 December 2022 under which Beach would acquire all of the shares in Warrego for an upfront cash consideration of $0.25 per share, plus the potential for additional scheme consideration if Warrego's Spanish assets are sold within 12 months of implementation of the scheme (Beach Counterproposal). Warrego has now issued a notice to Beach under the matching rights regime in the Beach Scheme Implementation Deed, which gives Beach 5 business days to match the revised Hancock Takeover Offer, expiring at 5:00pm (Perth time) on Monday, 12 December 2022. Until Beach has had an opportunity to match the revised Hancock Takeover Offer, the Warrego Directors maintain their existing recommendation in favour of the Beach scheme proposal. Shares closed 11.7 per cent higher at $0.315.

Pancontinental Energy (ASX:PCL) announced an extension has been granted to Pancontinental and its joint venture partners for a second one-year period to the current, four-year period of their offshore Petroleum Exploration Licence 87. Pancontinental Technical Director Mr Barry Rushworth commented: “We are pleased that the Minister for Mines and Energy in Namibia has seen fit to allow the PEL 87 Joint Venture additional time to complete its exploration program in the Initial Exploration Period of the licence and to waive the relinquishment requirement until the expiry of the extended term. With PEL 87, Pancontinental has a strategic position in a major new oil play of global significance amongst industry giants that include Shell, Total, QatarEnergy and Chevron”. Shares closed 33.33 per cent higher at $0.008.

Arizona Lithium (ASX:AZL) announced that it has entered a Strategic Alliance Terms Sheet with Navajo Transitional Energy Company which outlines the key terms of how it is proposed that NTEC will manage the development of Big Sandy from the permitting requirements for additional exploratory drilling through to Definitive Feasibility Study (DFS) and mine construction. The Terms Sheet allows the commencement of initial work by both parties on the development of the Big Sandy project while providing time for further mutual due diligence (6 months) and the development of a final definitive agreement (as the Strategic Alliance Terms Sheet is non-binding and does not contain all material terms). Shares closed 5.63 per cent higher at $0.075.

Latin Resources (ASX:LRS) has announced that their ongoing testwork continues to demonstrate exceptional high grade concentrates at their Salina’s Lithium Project. The results show excellent consistency across the width and depth of the known ore body. Latin Resources’ General Manager of Geology, Tony Greenaway, commented, “We intend to progress this into bulk pilot plant testwork, where we will optimise the flowsheet for the detailed PEA program that is planned to be completed by SGS in the first quarter next year.” Shares closed flat at $0.145.

Commodities and the dollar

Gold is trading at US$1821.10 gan ounce.
Iron ore is 4.1 per cent higher at US$107.30 a tonne.
Iron ore futures are pointing to a rise of 2.54 per cent.
Light crude is trading $0.67 higher at US$80.65 a barrel.
One Australian dollar is buying 68.40 US cents.

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