ASX six-day rally comes to an end: Aus shares close 0.3% lower

Market Reports

by Paul Sanger

The ASX closed lower in Wednesday trading, bringing its six-day winning streak to an end. At the closing bell, the S&P/ASX 200 was 0.32 per cent or 22.20 points lower at 6975.90.

The Dow Jones futures are pointing to a rise of 106 points.
The S&P 500 futures are pointing to a rise of 10.25 points.
The Nasdaq futures are pointing to a rise of 18 points.
The SPI futures are pointing to a fall of 36 points when the market next opens.

Asian equities are mostly higher Wednesday as geopolitical risks over Taiwan are somewhat fading. Japan gapped higher, then drifted lower over the day, looking to finish up. New Zealand surged on its wage growth report. Greater China reversed some of yesterday's losses, with the Hang Seng leading. Taiwan is edging higher after China's response to Pelosi visit was not as feared. South Korea is higher, Southeast Asia is mostly better, and India is opening with some losses.

US and European futures are eying a slightly firmer open. There was widespread attention on House Speaker Pelosi's visit to Taiwan, which prompted strong protests from China's foreign ministry. The Chinese military announced joint air and sea drills near Taiwan starting on Tuesday night. Pelosi arrived in Taipei on Tuesday and was greeted by Taiwan's  foreign minister Joseph Wu. She met with President Tsai Ing-wen Wednesday, where the two reaffirmed solidarity, though comments did not break new ground. Beijing has also responded with suspensions on a range of Taiwan imports.

Fed rate expectations remained the key driver on the macro front. Daly said the Fed's work on inflation is nowhere near done, while also stressing need to make good on commitment to tightening. Mester said she is looking for compelling evidence inflation has peaked and is moving down, and she has not seen that yet. Chicago's Evans also said year-end 2023 fed funds rate could near 4 per cent, or 50 basis points above market expectations. St Louis' Bullard reiterated the need for rates to be more restrictive, looking for 3.75 per cent to 4 per cent by year end.

The regional calendar was light. The New Zealand jobs report was softer than expected, with the unemployment rate unexpectedly rising from a record low and employment growth flat. However, wage inflation hit a 14-year high, underscoring ongoing labour market tightness and keeping the RBNZ hawkish narrative intact.

The Chinese Caixin services PMI unexpectedly strengthened in July, contrasting with softening in the official series, as attention turns to the economic growth trajectory in H2.

Japan's services PMI was revised lower to a marginal expansion.

The SPI futures are pointing to a fall of 43 points.

Best and worst performers

The best-performing sector was Information Technology, up 2.18 per cent. The worst-performing sector was Consumer Discretionary, down 1.23 per cent.

The best-performing stock in the S&P/ASX 200 was Pinnacle Investments (ASX:PNI), closing 12.21 per cent higher at $11.30. It was followed by shares in Lake Resources (ASX:LKE) and Zip Co (ASX:ZIP).

The worst-performing stock in the S&P/ASX 200 was Centuria Industrial REIT (ASX:CIP), closing 4.01 per cent lower at $2.87. It was followed by shares in The Star Entertainment Group (ASX:SGR) and City Chic Collective (ASX:CCX).

Company news

Lynas Rare Earths (ASX:LYC) today announced expansion plans with a $500m project to develop capacity at its Mount Weld mine and concentration plant to meet further market demand for rare earth materials. The project is expected to create up to 300 jobs during the construction phase and over 100 ongoing operational jobs in the Goldfields region of Western Australia. The demand for rare earth materials and magnets continues to accelerate "driven by growth in electric vehicles and wind energy". Shares closed 7.55 per cent higher at $9.55.

Star Minerals (ASX:SMS) today advised that it has received the assay results from its Phase 2 drilling campaign that was undertaken in anticipation of fast-tracking its knowledge of the geology and grade characteristics of the Tumblegum South gold project. Star Minerals’ CEO, Greg Almond, comments: “We are very satisfied to have completed this Phase 2 Resource definition programme. The assays confirm our initial assessment of Tumblegum South, and further support our decision to progress with our efforts to define and develop this gold deposit". Shares closed 9.1 per cent higher at 12 cents.

Platina Resources (ASX:PGM) today announced its plan to build a gold presence in Western Australia. PGM is seeking to expand its portfolio of gold exploration assets in Western Australia, applying for an exploration licence for its Jubilee gold project. Managing Director Corey Nolan said the Jubilee prospect offered significant potential. Further he added that once the tenement was granted, Platina could quickly mobilise via the Goldfields Highway and commence field activities. Shares closed 13.55 per cent higher at 3.4 cents.

Commodities and the dollar

Gold is trading at US$1769.02 an ounce.
Iron ore is 0.4 per cent higher at US$113.30 a tonne.
Iron ore futures are pointing to a rise of 0.88 per cent.
Light crude is trading $0.02 lower at US$94.40 a barrel.
One Australian dollar is buying 69.37 US cents.

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