Gold miners rise: ASX up 0.19% at noon

Market Reports

by Peter Milios

Shares in gold mining companies rose on Friday as the price of gold approached record highs due to concerns about a potential US recession and a weaker US dollar. Gold producers dominated the index's top five positions, with Silver Lake Resources (ASX:SLR), Regis Resources (ASX:RRL), Northern Star (ASX:NST), Evolution Mining (ASX:EVN) and Gold Road (ASX:GOR) all experiencing gains.

Spot gold also rose 0.2 per cent to $2043.24 per ounce, close to the one-year high reached on Thursday and within reach of a record high.

Gold is typically seen as a safe haven investment during times of economic uncertainty and inflation, and its price has risen by 12 per cent this year.

At noon, the S&P/ASX 200 is 0.19 per cent higher at 7,338.30.

The SPI futures are pointing to a rise of 8 points.

Best and worst performers

The best-performing sector is Information Technology, up 0.4. per cent. The worst-performing sector is REITs, down 0.54 per cent.

The best-performing large cap is Northern Star Resources (ASX:NST), trading 4.13 per cent higher at $14.37. It is followed by shares in IGO (ASX:IGO) and Evolution Mining (ASX:EVN).

The worst-performing large cap is Mercury NZ (ASX:MCY), trading 2.7 per cent lower at $5.77. It is followed by shares in The Lottery Corporation (ASX:TLC) and EBOS Group (ASX:EBO).

Asian markets

Asia-Pacific markets largely rose on Friday after Wall Street rose as the U.S. producer price index signalled further signs of cooling inflation.

The March producer price index, a measure of prices paid by companies and often a leading indicator of consumer inflation, declined by 0.5 per cent month-on-month, after the U.S. consumer price index saw the smallest increase in nearly two years.

In Singapore, its central bank maintained its monetary policy as its core inflation remains at the highest levels in 14 years. The economy saw a quarterly contraction of 0.7 per cent and a marginal growth of 0.1 per cent year-on-year, advance estimates showed.

Japan’s Nikkei 225 moved 0.84 per cent higher, while the Topix was 0.34 per cent up.

South Korea’s Kospi was 0.3 per cent higher, and the Kosdaq index saw the largest gain in the region as it climbed 1.19 per cent. Hong Kong’s Hang Seng index futures pointed to a higher open, standing at 20,468 compared to 20,344.48 at its last close.

March headline and core PPI post surprise declines

March headline PPI down 0.5 per cent m/m, cooler than consensus for 0.1 per cent and a second-straight monthly contraction following February's 0.1 per cent decline. Annualised PPI down 0.9pp to 2.7 per cent, lower than consensus 3.0 per cent and lowest since Jan-21. Core PPI (excluding food and energy) down 0.1 per cent m/m, also cooler than consensus 0.3 per cent and down from last month's 0.0 per cent. Annualised core down a full percentage point to 3.4 per cent, also below 3.5 per cent consensus, lowest since Mar-21. Goods prices were down 1.0 per cent m/m, with gasoline the biggest contributor, down 11.7 per cent m/m. Services down 0.3 per cent m/m largest decline since Apr-20, with trade services down 0.9 per cent and transportation and warehousing services down 1.3 per cent. Report followed yesterday's March CPI report that showed headline CPI also cooler than expected and down to the lowest annualised pace since May 2021. Elsewhere, initial jobless claims for the week to 8-Apr increased 11K w/w to 239K, a bit higher than consensus 235K. Continuing claims for week to 1-Apr down 13K to 1.810M, below consensus for 1.858M and breaking three-straight weekly declines.

Amazon CEO says consumers more careful with spending, enterprise sector looking to cut costs

Amazon CEO Andy Jassy told CNBC that while consumers are spending, they are much more careful about what they are spending on. Added that consumers are increasingly trading down. Note that on the enterprise side, most companies are focusing on cutting costs and saving money. Followed release of annual shareholder letter in which Jassy said that AWS faces short-term headwinds as companies are more cautious on their spending given the challenging macro conditions. However, stressed that the company likes a lot of the fundamentals it is seeing in AWS and its new customer pipeline is robust. Also pointed out that the advertising business continues to grow at a brisk pace. In addition, noted that Amazon has made several changes that it expects will meaningfully improve fulfilment costs and speed of delivery. Expressed confidence in plans to lower costs and expand the retail business with healthy margins. Consumer resilience, AWS growth slowdown and cost cutting/efficiency actions are some of the big themes into Amazon's Q1 earnings. Q1 revenue expected to increase ~28 per cent y/y, while operating income expected to decline ~16 per cent.

Company news

Sunstone Metals (ASX:STM) announced that their drilling has intersected more visible gold at the Limon target within the Bramaderos project in southern Ecuador. Sunstone Managing Director Malcolm Norris said: “This could have very significant ramifications for the total resource, the overall grade and the upfront development options at Bramaderos.” Shares are trading 15.6 per cent higher at 3.7 cents.

GBM Resources (ASX:GBZ) announced that their Diamond drilling is about to commence at the Mount Margaret Project located in North West Queensland. In response, Managing Director & CEO, Peter Rohner, commented: “Following some recent geophysical work and resulting interpretation, it is good to finally be back drilling at our Mt Margaret Copper-Gold Project after a period of drilling activity.” Shares are trading 21.4 per cent higher at 3.4 cents.

Vection Technologies (ASX:VR1) has announced that they have increased their FY23 Total Contract Value (TCV) metric to ~$16 million, a 60 per cent increase to their TCV metric announced on the 31st of January. As a result, the increase in TCV builds up on the growth and scale expected for the second half of fiscal 2023, expecting to generate a revenue guidance of $24 to $26 million. Shares are trading 11.11 per cent higher at 5 cents.

Commodities and the dollar

Gold is trading at US$1782.70 an ounce.
Iron ore futures are pointing to a 1.48 per cent rise.
One Australian dollar is buying 67.90 US cents.

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