Australian market rallies following Wall Street's lead: ASX 2.3% higher at noon

Market Reports

by Lauren Hayes

The ASX is enjoying a solid rally in Tuesday’s morning session with all 11 sectors in the green following Wall Street’s run overnight. It was the best day since June 24 for the Dow, and the S&P 500′s best day since July 27.

At noon, the S&P/ASX 200 is 2.36 per cent or 152.40 points higher at 6609.30.

The SPI futures are pointing to a rise of 152 points.

Best and worst performers

The best-performing sector is Financials, up 2.91 per cent. The sector with the fewest gains is Communication Services, up 0.90 per cent.

The best-performing stock in the S&P/ASX 200 is Sayona Mining (ASX:SYA), trading 11.11 per cent higher at $0.25. It is followed by shares in Pilbara Minerals (ASX:PLS) and St Barbara (ASX:SBM).

The worst-performing stock in the S&P/ASX 200 is Viva Energy Group (ASX:VEA), trading 1.13 per cent lower at $2.62. It is followed by shares in Sims (ASX:SGM) and Ampol (ASX:ALD).

Asian markets

Asia-Pacific shares are trading higher on Tuesday following Wall Street’s rally overnight.

The Nikkei 225 in Japan rose 2.2 per cent in early trade, and the Topix index was 2.4 per cent higher. South Korea’s Kospi is trading up 2.2 per cent on its return to trade after a holiday. The Kosdaq has added 2.24 per cent this morning. Markets in mainland China and Hong Kong are closed for a holiday.

MSCI’s broadest index of Asia-Pacific shares outside Japan have added 0.71 per cent this morning.

IEA Projects 2022 could be a record year for EVs

Electric vehicles (EVs) could be in for a record year according to the International Energy Agency’s (IEA) latest annual Tracking Clean Energy Progress report. The report estimates that EVs will account for 13 per cent of all new car sales globally in 2022, an increase of 4 percentage points from 2021, when 6.6 million new EVs hit the road despite supply chain snarls. China remains far-and-away the largest EV market, accounting for half of all sales in 2021. Lower costs could help to explain some of the success of EVs in China. According to the IEA’s 2022 Global Electric Vehicle Outlook report, the median price of an electric car in China is only 10 per cent more than conventional offerings. In other major markets, that difference is usually closer to 50 per cent (Investopedia).

Aluminium buyers hesitant to book new deals amid demand concerns

The makers of everything from automobiles to beverage cans to kitchen appliances are holding off booking next year's raw material orders amid demand concerns in the North American aluminium market. The so-called mating season, when buyers and sellers negotiate terms and conditions for next year's needs, is extending into the fall later than last year considering the buyers are hesitant to book more metal than might get consumed primarily due to uncertainty related to inflation, supply chains and economic growth. Additionally, shipping and logistics costs for the metal in the US are down 11 per cent so far this year, raising the possibility that consumers may be willing to hold off doing new contracts in hopes that costs could drop even more. Note that most analysts insist that the near-term outlook for the market is weak, but they don't expect a contraction in demand. However, a few analysts warned about headwinds related to surging interest rates (Bloomberg).

US to curb more tech exports to China

Reuters cited multiple sources indicating the US expected to announce new measures this week restricting Chinese companies from gaining access to technologies enabling high-performance computing, aimed at cutting off China's access to advanced semiconductor technology. A NY Times article affirms the announcement could come as early as this week and measures would be some of the most significant steps taken by the Biden administration. A number of Chinese firms, government research labs and other entities are expected to face restrictions similar to Huawei, though specific names are not yet clear. Effectively, any firm that uses American-made technologies would be blocked from selling to the Chinese entities that are targeted by the administration. It is worth noting that this is an expansion of the 'foreign direct product' rule which is just one part of Washington's planned restrictions.

Yuan risks still seen skewed to the downside

Reuters discussed analysts’ expectations of downside risks to yuan despite recent policy efforts with momentum underpinned by dollar strength. The article noted volatility priced in one-month yuan options doubled in the past month. Still, analysts do not anticipate Beijing to defend any particular level, in contrast to the last two times the yuan breached the psychologically significant 7 per dollar in 2019 and 2020, during the height of China-US trade tensions and the initial outbreak of COVID-19. Reasons for refraining from strong intervention include support for China's exports, while yuan depreciation has been smaller than the euro, yen and other major currencies this year. With mainland markets closed for extended holidays (trading to resume 10-Oct), it is worth recalling an earlier Reuters report that authorities requested banks to prepare to sell dollars in offshore branches as CNH continues to trade.

Japan PM Kishida aims to capitalise on yen weakness

Prime Minister Kishida's policy speech to start an extra parliament session was largely in line with prior draft leaks. Kishida declared Japan will "maximise the advantage of the weak yen" to resuscitate the economy and continue easing Covid border controls (Kyodo). The Press have widely discussed hopes that yen weakness would boost recovery in tourism, where income from overseas travellers plunged to ~JPY120B in 2021 from a record JPY4.8T in 2019, and government targeting revenues of above JPY5T. Japan will lift the current 50K cap on daily overseas arrivals on 11-Oct. The Prime Minister also pledged maximum efforts to combat price hikes. Amid mounting concerns of a confluence of economic downturn and higher costs, Kishida said his administration will bolster investment to develop human resources in growing industries. The economic package to be mapped out in October and FY22 supplementary budget bill to be submitted to parliament during the current Diet session was reaffirmed.

Company News

ImpediMed (ASX:IPD) this morning announced the signing of a Global Strategic Commercial Partnership and pilot program with GenesisCare. The pilot program will consist of an initial roll out of 5 SOZO units to establish lymphoedema screening services for breast cancer patients in centres across the US. These units are scheduled to be installed over the coming quarter. Upon successful completion of the pilot program, GenesisCare will evaluate a staged expansion to additional sites in the US GenesisCare is one of largest global providers of cancer care at more than 300 locations across the US, Australia, Spain, and the UK.  GenesisCare Global Chief Medical Officer, Wally Curran, MD said “Lymphoedema places physical, emotional, and financial burden on cancer survivors, and it is often identified later in the course of treatment or care. We can identify lymphoedema earlier using SOZO and ImpediMed’s lymphoedema prevention program, with the hope of improving our patients’ quality of life in survivorship”. At noon shares are trading 7.8 per cent higher to 7 cents.

Eastern Resources (ASX:EFE) today announced the maiden reverse circulation (RC) drilling program at the Trigg Hill Project is complete. The Company has completed 32 generally shallow wide spaced RC holes at East Curlew and Trigg Hill prospects and has intersected pegmatites in 30 holes of the 32 holes drilled. Multiple thick downhole intervals have been intersected. Executive Director Myles Fang commented “We are highly encouraged with the discovery of significant wide LCT pegmatites at Trigg Hill project. The drill data information collected provides us with significant information to progress the geological and metallurgical characterisation of the pegmatites at Trigg Hill Project”. At noon shares are trading up 30 per cent to 4 cents.

Graphite producer and battery material developer Volt Resources (ASX:VRC) announced this morning a summary of progress achieved to date on its strategy to become a battery materials producer in the US and Europe, based on an integrated supply chain using flake graphite from its mine and processing plant in Ukraine, and in time, from its development-ready Bunyu graphite project in Tanzania. Volt Managing Director, Trevor Matthews, commented “The Company is excited to summarise for investors the strong progress made across our downstream processing initiatives in the US this year, given the significant value uplift in creating finished graphite battery products. We have partnerships with a number of key groups, which allows us to develop products that utilise all graphite feedstock which supports excellent economics”. At noon shares are trading up 8.3 per cent to 3 cents.

Immutep (ASX:IMM; NASDAQ:IMMP) a clinical-stage biotechnology company developing novel immunotherapies for cancer and autoimmune disease, today announced the US Food and Drug Administration (FDA) has granted Fast Track designation to eftilagimod alpha (“efti” or “IMP321”) in combination with pembrolizumab for the treatment of 1st line non-small cell lung cancer (NSCLC). Efti is the Company’s first-in-class soluble LAG-3 clinical stage candidate which activates antigen presenting cells (APC) to engage both the innate and adaptive immune system to target solid tumors. “We are pleased to receive this Fast Track designation as it acknowledges efti’s unique potential to empower the human immune system against cancer and significantly enhance patient responses to standard-of-care immunotherapy. Efti also offers a chemotherapy-free option for NSCLC patients in need of less toxic and more durable solutions,” stated Marc Voigt, CEO of Immutep. At noon shares are trading 6.3 per cent higher to 26 cents.

Emerging lithium producer Sayona Mining (ASX:SYA; OTCQB:SYAXF) announced this morning they are fasttracking plans to move downstream in Québec, with the launch of a prefeasibility study by Sayona Québec (SYA 75 per cent; Piedmont Lithium Inc 25 per cent), to consider the potential for lithium carbonate production at the North American Lithium (NAL) operation. Sayona is examining the options for lithium carbonate or hydroxide production in Québec, working closely with its partner Piedmont Lithium. Sayona Managing Director, Brett Lynch said the study would provide valuable intelligence on future planned downstream processing in Québec. “Moving downstream has always been the plan for Sayona in Québec to enable a significant increase in profitability, whether through lithium carbonate or hydroxide production,” Mr Lynch said. “We look forward to examining the results of the PFS, as we work towards becoming a leading integrated producer and the largest in North America, amid accelerating demand from the battery and electric vehicle sector.” At noon shares are trading 11 per cent higher at 25 cents.

Commodities and the dollar

Silver had its second-best day of the past decade overnight rising 9.1 per cent. Silver has been trending lower all year, along with the rest of the precious metals space. However, momentum thrusts, like the one we saw overnight, are often early characteristics of a trend reversal.

Gold is trading at US$1698.78 an ounce.

One Australian dollar is buying 65.00 US cents.

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