Resources rally reboots as West mulls on sanctions, Profit warning sinks Boral: ASX up 1.1% at noon

Market Reports

by Melissa Darmawan

The Australian sharemarket jumped at the open to a nine week high, pulled higher by resources stocks amid surging commodity prices.

Resources stocks lead the rally

Oil prices rallied with several countries in Europe saying that they may join the US and other Western nations in enacting sanctions on Russian oil. Adding to the concerns were attacks by the Houthi rebels at Saudi Aramco sites over the weekend. Geopolitical risks remain elevated in volatile trade in an already tight market.

The news from the competition watchdog ACCC reinforced concerns after they said that they expect a gas shortfall "over the whole east coast" by 2026 or 2027 according to revised estimates which were deemed concerning.

This gave support for the heavyweight miners BHP (ASX:BHP) and South 32 (ASX:S32) surging over 4.4 per cent in early trade, Rio Tinto (ASX:RIO) is up 3 per cent while Fortescue Metals (ASX:FMG) is trading 2.5 per cent higher.

Whitehaven Coal (ASX:WHC) continues to rally, surging 3 per cent to $4.13 as the coal miner is set to arrange the shipment to Ukraine. The federal government set to foot the bill for the coal and delivery to the destination port.

Alumina (ASX:AWC) shares are on the move, following the federal government's ban on aluminium on Sunday night. Shares are 2 per cent higher at 4 cents while  KGL Resources (ASX:KGL) entered into a binding offtake agreement with Glencore for the sale of copper concentrate from KGL’s Jervois copper mine. Shares surged 11 per cent to 50 cents.

Bluescope (ASX:BSL) jumped 2.2 per cent to $20.43 after Moody changed its outlook to positive from stable while Amcor (ASX:AMC) shares have bucked the trend, down 0.5 per cent to $15.42 amid news that the have suspended new projects and investments in Russia.

Oil majors Woodside Petroleum (ASX:WPL) and Santos (ASX:STO) are up over 3 per cent as commodity traders appear optimistic that supply shortages are imminent amid Beijing’s decision to avoid lockdowns in a bid to maintain economic stability.

Commonwealth Bank tops the circle

Following a sell-off in US government bonds, Australian treasuries are surging with the 10-year up 12 basis points to 2.69 per cent. Financial stocks are poised to benefit from rising yields as the central bank looks to combat inflation through hiking interest rates.

Commonwealth Bank (ASX:CBA) are leading the major banks up 1.2 per cent with Westpac (ASX:WBC) adding the least by 0.9 per cent.

Technology stocks lag after yesterday’s surge

Technology stocks are leading the declines with Afterpay owner Block (ASX:SQ2) giving back 3.3 per cent today after surging over 9 per cent yesterday. Xero (ASX:XRO) stocks are close to erasing its gains for 2.4 per cent, trading lower at 2.2 per cent.

Japan’s Nikkei is in rally mode resuming trade after a long weekend, while investors digest news from China after their first commercial air crash in a decade while monitoring moves from Beijing on their pledge to support the equity market.

SPI futures

At noon, the S&P/ASX 200 is 1.1 per cent or 83 points higher at 7,362.

The SPI futures are pointing to a rise of 89 points.

Local economic news

Consumer confidence plunged 4.8 per cent last week to its lowest level since early September 2020 when Victoria experienced its second wave of Covid-19. Weekly inflation expectations rose 0.4 percentage points to six per cent as petrol prices soared, taking the four-week moving average to 5.5 per cent according to ANZ and Roy Morgan.

Company news

Coal miner shares New Hope Corporation (ASX:NHC) have jumped 6.1 per cent to $3.11 after a 17 cent interim dividend was unveiled with an additional special 13 cent payout, following a recovery on strong prices. The group posted a net profit after tax of $330.4 million to the end of January this year, compared to the loss of $55.4 million in the same time a year before. Underlying earnings before interest taxes depreciation and amortisation came in at $554.4 million compared to $81.2 million in the prior period while the company produced 4.4 million tonnes of saleable coal, the same as the comparable period. The coal miner said that the rise in its average realised prices rose to $192.38 per tonne in 2022 from $77.98 per tonne in 2021.

Boral (ASX:BLD) says earnings have been adversely impacted by lower sales volumes as a result of recent exceptional rainfall in New South Wales and Queensland, and sharp increases in fuel and coal prices. It now sees underlying earnings before interest and tax from continuing operations excluding property in financial 2022 between $145 million and $155 million, assuming no further extraordinary rain events. Shares fell 3 per cent to $3.35.

Telix Pharmaceuticals (ASX:TLX) says the development has started at its radiopharmaceutical production facility in Brussels South in the Wallonia region of Belgium, supported by a $18.2 million debt facility to help fund first-stage building works. The finance is earmarked to be used to build-out of a radiopharmacy, and installation of the first cyclotron, clean rooms and purification suites. The financing has been structured through low-cost loans, with BNP Paribas and IMBC Group, an initiative of the Walloon Regional Government. Shares are up 2.2 per cent to $5.05.

Bubs Australia (ASX:BUB) has announced the launch of its Bubs Supreme infant formula and toddler milk, which will be on the shelf in 500 Coles supermarkets from May this year. Bubs Supreme allows the company to access the global A2 beta-casein protein milk market, as well as leverage the consumer trend towards premiumisation in China. Shares are trading 3.5 per cent higher at 44.5 cents.

Best and worst performers

The best-performing sector is materials, up 3 per cent. The worst-performing sector is information technology, down almost 1 per cent.

The best-performing stock in the S&P/ASX 200 is Paladin Energy (ASX:PDN), trading 7.8 per cent higher at $0.90. It is followed by shares in Computershare (ASX:CPU) and BHP Group (ASX:BHP).

The worst-performing stock in the S&P/ASX 200 is Life360 (ASX:360), trading 5.3 per cent lower at $5.32. It is followed by shares in Atlas Arteria (ASX:ALX) and Zip Co (ASX:Z1P).

Commodities and the dollar

Gold is trading at US$1930.70 an ounce.
Iron ore is 2.3 per cent lower at US$147.90 a ton.
Iron ore futures are pointing to a fall of 0.7 per cent.
One Australian dollar is buying 73.82 US cents.

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