ASX climbs for 2nd day, up 0.8% at noon, spurred by resources and tech stocks

Market Reports

by Melissa Darmawan

The Australian sharemarket has started on an optimistic note, with gains building for a second day. Hopes that the Federal Reserve can navigate a soft landing has spurred investor’s risk appetite which saw the S&P 500 & Nasdaq both rise for a fourth straight session.

At noon, the S&P/ASX 200 is 0.8 per cent or 55 points higher at 6,703. The SPI futures are pointing to a rise of 48 points.

Two of the Federal Reserve’s most hawkish policy makers, Governor Christopher Waller and St. Louis Fed President James Bullard backed the need for restrictive monetary policy to suppress multi-year high inflation in a way that won’t tip the US into a recession.

“The better bet is that the economy will slow to the trend pace of growth and inflation will come under control relatively rapidly because of the sharp actions that the Federal Reserve is taking,” he said. “The base case is for soft landing at this point” said St. Louis Fed President James Bullard.

Meanwhile, investors are also monitoring the moves from China. They have found out that China’s Ministry of Finance is mulling on allowing local governments to sell US$220 billion (1.5 trillion yuan) of special bonds in the second half of this year to support the recovery of the economy, caused by extensive Covid-19 lockdowns.

The prospect of stimulus has once again provided much-needed optimism for investors, by lifting commodities including metals and oil, which is back above US$100 a barrel. Weakness in the US dollar also assisted. A rising US dollar makes buying commodities more expensive for producers trading in other currencies. However, a Russian court on Tuesday ordered a 30-day stop in oil loadings from the Caspian Pipeline Consortium in the Black Sea. Investors are concerned that if the pipeline is shut down, oil spot prices would rise due to producers scrambling for alternative options.

This could explain why resources stocks are catching a bid today.

Energy and material sectors are up for a second day. Coal stocks have rebounded as well as lithium companies. Information technology shares have rebounded after snapping a four-day winning streak and major bank stocks have advanced for a third day.

Woodside Energy (ASX:WDS) has added 2.9 per cent to $81.17, Santos (ASX:STO) has advanced 3.3 per cent to $7.12 and Beach Energy (ASX:BPT) is trading 3.7 per cent higher at $1.70.

Gold miners have also advanced with Northern Star Resources (ASX:NST) and Evolution Mining (ASX:EVN) both advancing at 1.4 per cent each.

Terracom (ASX:TER) has soared 8.7 per cent to 62 cents on news that the coal miner’s executive chairman Craig Ransley has retired. Whitehaven Coal (ASX:WHC) has added 5.5 per cent to $4.99, while New Hope Corporation (ASX:NHC) and Bowen Coking Coal (ASX:BCB) have both gained around 4 per cent each.

Gold miners have also advanced with Northern Star Resources (ASX:NST) and Evolution Mining (ASX:EVN) both advancing at 1.4 per cent each.

Elsewhere, Commonwealth Bank (ASX:CBA) is up 0.5 per cent to $93.55, while Macquarie Bank (ASX:MQG), ANZ Bank (ASX:ANZ), National Australia Bank (ASX:NAB) and Westpac (ASX:WBC) have added in the range of 0.1 to 0.6 per cent each.

Local economic news

Business turnover increased in 11 of the 13 selected industries in May, according to the Australian Bureau of Statistics. The industry with the largest rise in turnover was electricity, gas, water and waste services, which increased by 22.9 per cent over the month from April. The increase in turnover in the industry coincided with higher electricity and gas wholesale prices, given rising input costs for producing energy and generator outages.

Company news

Lithium miner Vulcan Energy (ASX:VUL) will further develop its Italian projects after signing an agreement with Italy's largest geothermal energy producer Enel Green Power. Shares are trading 8.1 per cent higher at $5.90.

St Barbara (ASX:SBM) has posted a strong June quarter, saying that its three provinces have achieved the 2022 financial year guidance. Shares are trading 7.2 per cent higher at 89 cents.

Neometals (ASX:NMT) has completed the class 3 engineering cost study component of its Vanadium recovery study, which confirms the potential for lowest quartile operating costs. Shares are trading 6.6 per cent higher at $1.05.

New Zealand Coastal Seafoods (ASX:NZS) has commercialised a new hydrolysed marine collagen powder to the nutraceuticals market after developing a less costly process for collagen extraction from Ling maw. Shares are trading 11.1 per cent higher at under 1 cent.

Magellan Financial (ASX:MFG) has experienced net outflows of $5.2 billion during the June quarter, which comprises net retail outflows of $1.7 billion and net institutional outflows of $3.5 billion. Shares are trading 1 per cent lower at $12.15.

Painting equipment supplier Oldfields Holdings (ASX:OLH) has appointed Michael Micallef as chief executive officer and managing director, effective from July 25.

Australian resources company TNG (ASX:TNG) has received a letter of support from Export Finance Australia, that considers the provision of up to $300 million in debt funding for its Mount Peake project in the Northern Territory. Shares are trading 35.3 per cent higher at 6.9 cents.

Eastern Resources (ASX:EFE) has announced “outstanding” results from its Trigg Hill lithium project in Western Australia. Shares are trading 23.1 per cent higher at 3.2 cents.
 
Best and worst performers

The best-performing stock in the S&P/ASX 200 is Life360 (ASX:360), trading 12.7 per cent higher at $4.09. It is followed by shares in Liontown Resources (ASX:LTR) and Allkem (ASX:AKE).

The worst-performing stock in the S&P/ASX 200 is Orora (ASX:ORA), trading 5.9 per cent lower at $3.33. It is followed by shares in Collins Foods (ASX:CKF) and Domino Pizza Enterprises (ASX:DMP).

Commodities and the dollar

Gold is trading at US$1743.93 an ounce.
Iron ore is 2.2 per cent higher at US$114.85 a ton.
Iron ore futures are pointing to a rise of 1 per cent.
One Australian dollar is buying 68.47 US cents.

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