At just past 11.30am, the ASX soared 1 per cent to its highest level since April. Since then, it has slightly settled down, however is still up 0.8 per cent at 7,389 at noon.
In sector-related news, all sectors besides Materials are up, with Industrials, Information and Energy up by roughly 1.5 per cent each.
China has warned that they would tighten the supervision of pricing following a surge in the price of iron ore. As such, the price of iron ore has cooled slightly.
BHP is down 0.34 per cent
(ASX:BHP), Rio Tinto
(ASX:RIO) is down 0.54 per cent, whilst Fortescue Metals
(ASX:FMG) is down 2.4 per cent.
The SPI futures are pointing to a rise of 64 points.
Best and worst performersAll sectors are in the black. The best-performing sector is Information Technology, up 2.13 per cent. The sector with the fewest gains is Materials, up 0.37 per cent.
The best-performing large cap is Xero
(ASX:XRO), trading 5.39 per cent higher at $74.90. It is followed by shares in SEEK
(ASX:SEK) and WiseTech Global
(ASX:WTC).
The worst-performing large cap is Computershare
(ASX:CPU), trading 1.91 per cent lower at $23.64. It is followed by shares in Fortescue Metals Group
(ASX:FMG) and Allkem
(ASX:AKE).
Asian newsMarkets in the Asia-Pacific were set to trade mixed as expectations of cooled inflation in the US lifted investor sentiment in the region.
On Friday, the University of Michigan consumer sentiment survey showed the one-year inflation outlook fell to 4 per cent, the third straight monthly decrease and the lowest level since April 2021. That followed December’s CPI report, which showed prices declined 0.1 per cent compared with a month ago — raising hopes that the Federal Reserve may soon slow its rate hikes.
Japan’s Nikkei 225 fell 1 per cent and the Topix shed 0.61 per cent. South Korea’s Kospi inched up 0.2 per cent and the Kodaq gained 0.62 per cent.
Banks bounceBig banks (JPMorgan, BofA, Citi, Wells Fargo) largely sold off in the initial wake of their Q4 reports. The big concern seemed to be the softer NII guidance from JPMorgan and Wells Fargo and the downside risk to 2023 estimates (earnings reset flagged as the biggest broader market risk heading into 2023). Higher provisions, lower quality upside drivers and disappointing expense guidance were some of the other selective areas of concern. No one specific factor behind the bounce through the later part of the session, though peak rate, rising deposit beta and credit normalization dynamics already widely hashed out overhangs on banking group sentiment. In addition, credit quality still benign and normalization seems to have several more quarters to run before hitting pre-pandemic levels. Loan growth backdrop also still solid as the healthy consumer and corporate balance sheet narrative remains intact (households underpinned by tight labor market) and there seemed to be some better takeaway from the buyback updates. Focus next week shifts to the regionals and IBs.
Michigan Survey of Consumer Sentiment beats, one-year inflation expectations lowest since April 2021January preliminary Michigan Consumer Sentiment up 4.9 points m/m to 64.6, beating estimates for 60.3. Marked a second-straight gain and highest print in nine months. Current conditions index up 9.2 points to 68.6, while expectations index up 2.1 points to 62.0. One-year inflation expectations fell 0.4pp to 4.0 per cent, the lowest since Jun-21 after a fourth-straight monthly decline. Inflation expectations for 5-10 year horizon ticked up 0.1pp to 3.0 per cent, though remains rangebound around 2.9-3.1 per cent. Report also highlighted current assessment of personal finances up 16 points m/m to highest reading in eight months given higher incomes, easing inflation. from a Fed perspective, early reads said report adds some more support for soft landing narrative, with inflation coming down while economic activity and labor markets remain fairly resilient. However, Fed officials have continued raise-and-hold messaging despite positive inflation metrics, while Street continues to flag risk of Fed pausing only to then continue tightening if financial conditions continue to loosen and a potential resurgence in inflation.
Sector performance tightly bunched, with financials in the leadMarket was fairly mixed today after starting the session broadly weaker. Banks outperformed in the wake of today's Q4 earnings reports from the moneycenters, though some other large-caps and regionals were lower. Custody banks were helped by a well-received report from BK-US . Department stores had a good day, with cruiselines, hotels, and casual diners also helping consumer discretionary. Building products, P&C insurers, credit cards, machinery, HPCs, chemicals, and media outperformed as well. China tech was mostly higher, adding to a stronger week. To the downside, autos struggled, with TSLA-US lower on news it is discounting in NA/Europe to try to spark demand. However, Ford and GM also weak on the day. Airlines were weighed down after a Q1 EPS guidance miss from DAL-US . Multiple downgrades hit A&D. Managed care saw strength earlier in the session on UNH-US 's report, but gave that up in the afternoon. REITs and utilities lagged.
Some positive spin for the weekSoft-landing spillover from last week with big ramp in Google searches and more support from the economic calendar with a sixth straight monthly decline in consumer inflation, one-year inflation expectations lowest since April 2021, largest y/y decline in Manheim used car index on record and more signs of labor market tightness in latest initial claims reading. No pushback against continued easing of financial conditions from Powell in his remarks this week. More Fed officials came out in support for a further slowdown in pace of tightening to 25 bp next month. Lower bar heading into earnings season with Q4 bottom-up estimate down 6.5 per cent vs five-year average decline of 2.5 per cent. Still plenty of "solid demand" commentary in the corporate updates this week, including from the economic normalization beneficiaries (ICR updates suggested a largely in-line holiday season). Decent M&A activity to start the week which seemed to help growth software. China reopening momentum with pickup in mobility/activity data and Street more upbeat on 2023 recovery.
Company newseMetals
(ASX:EMT) has announced exceptionally high grade rock chips of Niobium and Tantalum at their project in WA. Although the extent of the rich materials is yet to be specifically determined, the company personnel believe it is related to iron rich material confined to structural infill zones. Shares were trading 36.4 percent higher at 1.5 cents at noon.
Ioneer
(ASX:INR) announces that the U.S. Department of Energy Offers a conditional commitment for a Loan of Up to US$700 Million for their lithium-boron project in Nevada. James Calaway, Executive Chairman of Ioneer commented: “The Conditional Commitment highlights Rhyolite Ridge’s strategic role in strengthening America’s critical mineral supply chain in providing a secure, sustainable, and reliable domestic source of lithium for the growing electric vehicle ecosystem.” Shares were trading 4.41 percent lower at 6.5 cents at noon.
White Cliff Minerals
(ASX:WCN) has identified Rare Earth Elements at its Hine Hill Project in WA. commenting on the progress, White Cliff Technical Director Ed Mead said: “Our maiden drill program at Hines Hill has been extremely successful in demonstrating the potential of the project with the discovery of shallow mineralisation.” Further geochemical sampling has also been completed, to grow the project potential. Shares were trading 19.2 percent higher at 1.6 cents at noon.
Splitit Payments
(ASX:SPT), the only white-label service allowing customers to pay by instalments using their existing credit on their payment card at checkout, announces that Splitit and Alipay have formed a partnership to power the ‘Pay After Delivery’ option for shoppers on AliExpress, a global eCommerce marketplace owned by the Alibaba Group. The service will initially launch in Germany, France and Spain, with plans to expand into other international markets. In response, Splitit CEO Nandan Sheth says, “Our work with Alipay is a testament to the flexibility of Splitit’s platform and the strength of our new partnership with Checkout.com. Together we are providing a valuable resource for sellers and shoppers by powering payment after delivery.” Shares were trading 11.1 percent higher at 20 cents at noon.
Commodities and the dollarGold is trading at US$1782.70 an ounce.
Iron ore is 2.7 per cent higher at US$127.00 a tonne.
Iron ore futures are pointing to a 1 per cent fall.
One Australian dollar is buying 69.89 US cents..
