ASX down 1.19% at noon: New housing approvals experience growth

Market Reports

by Peter Milios

At noon, the S&P/ASX 200 is 1.19 per cent lower at 6,949.20.

In August, new housing approvals experienced a significant rebound, growing by 7 percent compared to a revised figure of -8.1 percent in July. This increase was primarily driven by a 6 percent rise in house approvals and an 8.8 percent increase in approvals for attached dwellings, following two months of double-digit declines. The volatile monthly data series contributed to this fluctuation.

This development is important because it comes at a time when building costs have been soaring, and borrowing costs have been increasing, which has made new developments more expensive for potential buyers.

However, there are signs of improvement as building cost inflation is moderating, and the expectation of fewer interest rate hikes is boosting the confidence of buyers to commit to new mortgages.

Additionally, recent data from the Australian Bureau of Statistics (ABS) revealed that new mortgage commitments to owner-occupiers increased by 2.6 percent in August, following a decline of 1.6 percent in July. Loan commitments to investors also rose by 1.6 percent, rebounding from a 0.3 percent slip in July.

As a result, the Reserve Bank of Australia (RBA) is expected to keep the cash rate unchanged for the fourth consecutive month, which is likely to further stimulate demand for credit in the housing market.

The SPI futures are pointing to a fall of 87 points.

Best and worst performers

The best-performing sector is Health Care, up 0.8 per cent. The worst-performing sector is Energy, down 3.28 per cent.

The best-performing large cap is CSL (ASX:CSL), trading 1.35 per cent higher at $249.67. It is followed by shares in ResMed (ASX:RMD) and Computershare (ASX:CPU).

The worst-performing large cap is Whitehaven Coal (ASX:WHC), trading 3.69 per cent lower at $6.925. It is followed by shares in Northern Star Resources (ASX:NST) and Evolution Mining (ASX:EVN).

Asian news

Asia-Pacific stocks fell even after manufacturing data out of China bounced back to expansion territory.

China’s factory activity in September expanded for the first time since April, according to official data over the weekend. China’s PMI climbed to 50.2 in September from 49.7, beating Reuters’ expectations of 50.0.

China’s markets are closed for the weeklong Golden Week holiday. South Korean and Hong Kong’s markets are also closed for holidays.

Japan’s Nikkei 225 traded 0.31% lower to close at 31,759.88, while the Topix slipped 0.39% to end at 2,314.

Sentiment of Japan’s big manufacturers improved to a score of 9 in the third quarter, up from 5 in the previous three months, the closely-watched central bank tankan survey showed.

Australia’s S&P/ASX 200 was down 0.22% to end at 7,033.2.

On Friday in the U.S., the three major indexes were mixed. The Dow and S&P 500 finished the session lower by 0.5% and 0.3%, respectively, capping off a negative week for the two indexes. The Nasdaq Composite finished up 0.1%.

Over the weekend, U.S. legislators were able to reach a temporary agreement that averted a government shutdown.

Company news

ECS Botanics (ASX:ECS) has secured a $24 million offtake agreement with MediCann Health for the supply of medicinal cannabis. Commenting on the agreement, ECS Managing Director, Nan-Maree Schoerie said: “ This agreement not only reinforces our dedication to meeting the growing demand for affordable, accessible, and effective medicinal cannabis products but also marks another milestone following our June 2023 agreements, totalling $11.9 million.” Shares are trading 22.73 per cent higher at 2.7 cents.

Nimy Resources (ASX:NIM) announced that massive nickel-copper sulphides have been identified in the first hole at MLEM conductive plates. In responses, Executive Director Luke Hampson said: “The intersections represent proof of concept in our search for massive sulphide mineralisation in an enormous holding covering an 80km strike of greenstone in over 2000km² that has already delivered very deep intersections of low-grade nickel from previous drilling.” Shares are trading 26.32 per cent higher at 24 cents.

Legacy Iron Ore (ASX:LCY) has announced the achievement of a significant milestone at the Mount Celia gold deposit with the Blue Peter pit to go into production. In response, Legacy’s Chief Executive Officer, Rakesh Gupta, said, “The Mount Celia Gold Project will generate cash flow for the Company to fund ongoing exploration and development programs it has planned for its South Laverton Project area.” Shares are trading 6.25 per cent higher 1.7 cents.

Commodities and the dollar

Gold is trading at US$1940.10 an ounce.

Iron ore is 0.1 per cent higher at US$119.90 a tonne.

Iron ore futures are pointing to a 0.88 per cent rise.

One Australian dollar is buying 63.65 US cents.

Peter Milios

Peter Milios is a recent graduate from the University of Technology - majoring in Finance and Accounting. Peter is currently working under equity research analyst Di Brookman for Corporate Connect Research.

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