ASX climbs higher again in morning trading: Aus shares up 0.23%

Market Reports

by Paul Sanger

Australian shares are on track to end the week higher after Wall Street made gains overnight.

The ASX held a minute's silence at 11am to mark the death of Queen Elizabeth II.

At noon, the S&P/ASX 200 is 0.23 per cent or 15.50 points higher at 6864.20.

The SPI futures are pointing to a rise of 23 points.

Best and worst performers

The best-performing sector is Materials, up 2.01 per cent. The worst-performing sector is Consumer Staples, down 1.53 per cent.

The best-performing stock in the S&P/ASX 200 is Mineral Resources (ASX:MIN), trading 11.50 per cent higher at $70.20. It is followed by shares in De Grey Mining (ASX:DEG) and Sandfire Resources (ASX:SFR).

The worst-performing stock in the S&P/ASX 200 is Liontown Resources (ASX:LTR), trading 5.41 per cent lower at $1.75. It is followed by shares in Imugene (ASX:IMU) and Zip Co (ASX:ZIP).

Asian markets

Markets in Asia-Pacific were mostly higher as investors digest Federal Reserve Chair Jerome Powell’s latest comments. He vowed to raise rates to tackle inflation “until the job is done”.

In Japan, the Nikkei 225 has risen 0.61 per cent and the Topix has risen 0.35 per cent. In South Korea, the Kospi is up 0.33 per cent and the Kosdaq is 1.25 per cent higher. China is slated to release its August inflation data, which is expected to have picked up from July.

“China’s weak growth outlook and accommodative monetary policy stance against the aggressive tightening underway by the FOMC will keep USD/CNH well supported,” Commonwealth Bank of Australia’s FX strategist Kristina Clifton said in a note, referring to the offshore yuan.

The offshore yuan stands at 6.96, while the Japanese yen is at 143.85. The Korean won stands at 1,383.11 against the greenback.

Emerging market portfolio inflows return, but China lagging

Reuters cited Institute of International Finance data showing China debt markets extended portfolio outflows to a seventh straight month with $7.7b in August. Equities saw inflows of $1b, marking the smallest year-to-date inflows in seven years. Comes amid market concerns about China's economy, weighed down by repeated COVID-19 lockdowns and a property market crisis. Yuan is on track for its worst annual performance in more than two decades against a buoyant dollar. In contrast, emerging markets saw inflows of $27b in August, after five consecutive months of outflows, the longest such streak in records going back to 2005. Prior outflows were partly driven by higher rates in developed economies, exacerbated by a spike in food and energy prices triggered by Russia's invasion of Ukraine.

Japan's latest verbal intervention still having little impact

Kyodo discussed reactions to latest comments from Japan officials on the yen as market participants remain unfazed by the threat of FX intervention. Even if such action is taken, analysts say the chances are that it will be a drop in the ocean and do little to reverse the trend of a strong dollar, unless the BOJ changes its dovish stance -- an unlikely scenario. Forecasts indicate the yen could fall toward 148 by year-end. Follows comments from FX policy chief Masato Kanda, who threatened to take necessary steps with all options on the table. He said recent "excessively volatile" yen moves cannot be explained by economic fundamentals -- the latter view countered by analysts. Story also noted Japan faces a high hurdle for winning support from the US towards coordinated intervention while unilateral action would be largely ineffective.

Japan PM Kishida orders fresh stimulus package in October

Bloomberg reported Prime Minister Kishida ordered a fresh economic package in October with the possibility of an extra budget. Kishida announced key points of additional price relief measures to be detailed later Friday, saying that gasoline subsidies and price caps for wheat will be maintained. Low-income households will receive JPY50,000 ($347) handouts and regional governments will get a JPY600B boost in grants to cope with inflation. About JPY3.5T in reserves will be tapped to fund the plan. Contents largely consistent with an earlier Nikkei report, which noted cash handouts are half the amount distributed in FY21 to cushion against pandemic impacts, though there were no details on the size of spending or extra budget. Recall that recent stimulus funding has been spread across reserves, extra budgets, and baked into general budgets. FY23 general budget preparations have already begun with ministries requesting JPY110.5T and final figures likely to exceed JPY107.6T deployed in FY22, posing further fiscal headwinds.

Company news

The FDA has granted Radiopharm Theranostics (ASX:RAD) Orphan Drug Designation for its DUNP19 technology for the treatment of osteosarcoma. The designation can be granted by the FDA for a drug or biologic product with the potential to diagnose, prevent or treat rare diseases and conditions. Recipients of the designation receive benefits and incentives, including tax credits for qualified clinical trials, exemption from user fees and a potential seven years of market exclusivity following the drug’s approval. Shares are trading 8.8 per cent higher at 18 cents.

Mineral Resources (ASX:MIN) has confirmed speculation in the Australian Financial Review that it is considering a potential listing of its lithium business. MinRes has investment bank JPMorgan working on the plan, which could see it float its lithium mining and processing operations in a separate entity on the New York Stock Exchange. The potential move comes only months after MinRes restructured the company into four operating pillars -- mining services, iron ore, lithium and energy. Shares are trading 11.71 per cent higher at $70.33.

Tanzanian graphite developer Black Rock Mining (ASX:BKT) has announced that its 84 per cent-owned Tanzanian subsidiary Faru Graphite Corporation has signed a Conditional Framework Agreement with US-based Urbix for material from Module 2 of the Mahenge Graphite Project. Commenting on the transaction, Black Rock CEO John de Vries said: “Signing this Agreement with Urbix is potentially transformational in the context that we are developing an additional USA and European option for the processing of Black Rock’s graphite into battery applications." Shares are trading 24.14 per cent higher at 18 cents.

Commodities and the dollar

Gold is trading at US$1716.53 an ounce.
Iron ore is 3.0 per cent higher at US$99.80 a tonne.
Iron ore futures are pointing to a rise of 2.95 per cent.
One Australian dollar is buying 67.90 US cents.

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