Lithium stocks falling, Critical Minerals Summit commencing: ASX up 0.29% at noon

Market Reports

by Peter Milios

The S&P/ASX 200 is 0.29 per cent or 20.70 points higher at 7262.50 at noon.

It is a bleak end to the week for the lithium sector, with many of its players down substantially.

Liontown Resources (ASX:LTR) is down 5.05 per cent, Core Lithium (ASX:CXO) is down 3.18 per, Lake Resources (ASX:LKE) is down 1.91 per cent and Mineral Resources is down 3.63 per cent.

Although there is no specific reason for this, a possible reason could be the recent COVID outbreak in China, as the nation is sticking with its zero-COVID policy and expanding lockdowns.

In other news, the Australian-PwC Critical Minerals Summit was conducted today, with the government taking a strong stance toward decarbonisation, outlining its plans to fund mining companies that operate in the renewable energy space, such as lithium, rare earth, cobalt and graphite miners and producers.

MP Jim Chalmers outlined the government's three main points in his speech.

“First is our work to refresh the critical minerals strategy to plan ahead as best as we can and to make sure that all of us, not just the government, are walking in the same direction.”

Second is "improving our value-add capacity and the budget... $50 million to set up a new research and development hub."

The third point is "longer term thinking on our investment requirements including foreign investment... attracting more global capital to our shores will be essential for us to realise the full benefits of this opportunity".

The SPI futures are pointing to a rise of 11 points.

Best and worst performers

The best-performing sector is Consumer Discretionary, up 1.43 per cent. The worst-performing sector is Materials, down 0.89 per cent.

The best-performing stock in the S&P/ASX 200 is Nanosonics (ASX:NAN), trading 8.41 per cent higher at $4.51. It is followed by shares in Virgin Money UK (ASX:VUK) and Harvey Norman Holdings (ASX:HVN).

The worst-performing stock in the S&P/ASX 200 is Liontown Resources (ASX:LTR), trading 5.05 per cent lower at $1.98. It is followed by shares in Allkem (ASX:AKE) and Pilbara Minerals (ASX:PLS).

Asian news

Asian equities are mixed to open on Friday. Nikkei is down 0.10 per cent, whilst Kospi is trading 0.06 per cent higher.

The Hang Seng futures are pointing to modest gains on the open.

Waiting for Thanksgiving

Stocks largely extended Tuesday's push higher heading into the Thanksgiving holiday. Lower rate backdrop seemed to help. Bonds strength was underpinned by peak inflation momentum with dampened price pressures in the flash PMIs, lower one-year inflation expectations in the University of Michigan survey and the latest selloff in oil. In addition, some thoughts FOMC minutes leaned dovish though no real surprises given the constant barrage of Fedspeak. Also some talk about how CTA momentum has flipped positive again, while Deutsche Bank had bullish comments on positioning earlier in the week. The Tesla upgrade helped the growth factor. Earnings a mixed (to worse) bag and nothing really new from a thematic perspective, including the latest cost-cutting/restructuring headlines. China COVID developments continued to play into global growth concerns, though today has seen reports that new property support measures are being put into action and there were hints of a RRR cut to support economic growth out of the latest State Council meeting.

November FOMC minutes discuss stepped-down hiking pace, overtightening risks

As expected, the minutes from the FOMC's 1-2 November meeting reflect member discussions about next steps. There was a general acknowledgement inflation risks remained skewed to the upside while risks to the economic outlook are weighted to the downside. However, also noted tentative signs the labour market is coming into better balance and observed inflation expectations remained well anchored. Also noted a high degree of uncertainty due to lagged effects of policy actions. In this climate, participants felt a slower pace of hikes would better allow them to assess progress in the fight against inflation, while several also argued over tightening could raise economic risks. Nevertheless, some said the ultimate level of rates may be higher than first thought. In general, the minutes contained little surprise, especially as Fedspeak has maintained a tight focus on a coming step-down in hikes and a higher-for-longer approach to tamp down on inflation.

Most sectors higher though energy a notable laggard

Sectors were mostly higher today, with growth cutting into value's WTD outperformance. FANMAG stocks are better, adding to yesterday's gains. Machinery got a boost from DE-US 's well-received report. Autos did well, with TSLA-US a notable gainer on an upgrade (and the EV space was strong). Homebuilders were better amid today's lower Treasury yields. Unprofitable tech fared well after a mixed session Tuesday. Airlines, semis, exchanges, software, trucking, apparel were among the other outperformers. To the downside, energy was a big laggard amid oil's slide; E&Ps, oil services, integrateds, and refiners were all weak today. Industrial metals pulled back from some recent strength. Fertilisers were broadly lower. Biotech and pharma were underperformers in healthcare. Department stores were generally down with JWN-US a drag after its report. Banks were mixed, with regionals worse (though C-US hit after a Fed warning). Auto suppliers, life insurers, A&D, telecom were some of the other laggards.

Company news

E2 Metals (ASX:E2M) announced that it has acquired a 100 per cent interest in the advanced Pingüino silver gold project from Austral Gold. This new acquisition is one of the largest largest undeveloped silver gold resources in Santa Cruz, and there is significant potential to upgrade the resource through expansion and new vein discoveries. In response, Chairman Peter Mullens states: “The acquisition has strong rationale for both parties, and is expected to provide E2 an accelerated pathway to critical mass and resource development.” Share are trading 23.1 per cent higher at $0.16.

xReality Group (ASX:XRG) announced that its defence subsidiary Operator Tactical Solutions has teamed with DroneShield (ASX:DRO) to provide eXtended Counter Unmanned Aircraft Systems (C-UAS) training solutions for front line defenders. The C-UAS market is currently valued at over $1BN USD, rapidly growing at a CAGR of 27 per cent to reach $3.8BN USD by 2027. Shares are trading 10 per cent higher at $0.066.

Los Cerros (ASX:LCL) announced that it has acquired 100 per cent of Papua New Guinea focussed private exploration company Footprint Resources Pty, exposing the Company to multiple high grade exploration targets within five large project areas prospective for copper-gold and nickel. The acquisition provides high-impact, new discovery potential to Los Cerros’ shareholders, in a region that is proven to host a large number of major mineral deposits. Los Cerros Managing Director, Jason Stirbinskis added “This transformational addition to the Los Cerros mineral portfolio offers immediate and material exploration upside as well as jurisdictional and metal diversity, in particular the addition of critical metals to the electric vehicle sector. Shares are trading 19.4 per cent higher at $0.043.

Adveritas (ASX:AV1) notes the media speculation overnight regarding a possible acquisition of its securities. The Company can confirm it has received a conditional non-binding indicative proposal from NASDAQ listed Integral Ad Science, Inc), a global leader in digital ad verification, to acquire 100 per cent of the shares in Adveritas for $0.11 cash per share payable in cash and/or shares in IAS.

INOVIQ (ASX:IIQ) has provided an update on US commercial activities for its EXO-NET and hTERT products and new initiatives to centralise its EXO-NET research, development and manufacturing in Australia. CEO Dr Leearne Hinch said: “INOVIQ has recently implemented several commercial initiatives in the US including the engagement of Percorso Life Sciences to provide US-based contract sales and logistics services, implementation of our first sales campaign for EXO-NET and reverting to a direct distribution model for hTERT in the US. These initiatives are expected to increase product awareness, build sales, and improve customer service for our EXO-NET and hTERT products in the US. Shares are trading 6.5 per cent higher at $0.58.

Commodities and the dollar

Gold is trading at US$1753.21 an ounce.
Iron ore is 1.3 per cent higher at US$96.45 a tonne.
Iron ore futures are pointing to a rise of 0.27 per cent.
One Australian dollar is buying 67.55 US cents.

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