ASX 200 shrugged off early losses to close up 36 to 7365 (0.5%) after the RBA raised rates by 25bps but hinted perhaps at a pause. The market took that well and rallied strongly post the announcement. Banks back yet again, the Big Bank Basket up to $175.48 (0.6%). With MQG up 1.6% and insurers rallying strongly with QBE up 2.3% and SUN up 1.3%. Fund managers better with the exception of MFG falling 0.6%. Industrials across the board firm, WOW up 1.1% and COL up 0.9% with WES doing well running 1.6% higher. Healthcare good, CSL up 0.8% and RMD doing well up 1.1% and REITs firmed with GMG up 0.7% and SCG up 1.0%. Tech was a little left behind as WTC steady and XRO putting on 1.4% with the All-Tech Index up 0.4%. Resources remain in the doghouse. BHP off 1% and RIO down 0.3% ahead of ex-divs thursday, Lithium stocks under the knife as Citi cut price forecasts. Gold miners mixed despite AUD bullion once again pushing higher. Oil and gas better led by WDS up 1.1% and STO having a lovely day out up 2.7%. Even coal stocks steadied despite under pressure coal prices. On the corporate front, IVC was raised from the dead with a private equity raid and subsequent bid at 1265c. Some corporate resignations from CEOs at MP1 and ALQ. MP1 shareholders should be celebrating but not to be as the stock dropped 15%. On the economic front, trade data missed expectations, consumer confidence still nervy, and the RBA moved. Asian markets are generally better as the NPC continues in China. The 10-year yield fell to 3.70%. Dow futures up 37 points and Nasdaq futures up 42 points. 

HEADLINES

• Winners: IVC, MYR, PPH, SGF, WBT, AX1, SLX
• Losers: MP1, BRN, OBL, INR, JDO, BOE, GRR
• Positive sectors: Banks. Oil and Gas. REITS, Insurers. Industrials.Tech.
• Negative sectors: Iron ore miners. Lithium. Gold miners.
• High 7370 Low 7303RBA statement lifts hopes.
• Big Bank Basket: Good gains to $175.48 up 0.6%
• All-Tech index: Up 0.4%
• Gold higher to $2753
• Bitcoin: Steady at US$22,456
• Aussie Dollar: Falls to 67.12c on RBA tweak.
• 10-Year Yield: Falls to 3.70%.
• Asian markets: Asian markets mixed, Japan up 0.4%, China up 0.2% but HK up 1.1%
• US Futures: Dow up 37 Nasdaq up 42

MAJOR MOVERS

• IVC +34.97% PE makes its move.
• WBT +5.37% first ReRam chip available through Skywalker.
• SYA +4.26% capital raise at a premium.
• SLX +4.46% bouncing slightly.
• DOW +3.33% finding a base.
• APX +7.69% AI bounce.
• 5EA +6.36% investor presentation yesterday.
• MP1 -14.98% CEO resigns. Maybe good.
• BRN -7.56% profit-taking after rally yesterday.
• INR -5.26% broker report.
• LTR -3.78% profit taking after 20% rise.
• ALQ -3.68% CEO resignation.
• BVS -43.08% hail Mary, full of grace cap raising.
• RHY -9.24% TGA disappointment.
• Speculative Stock of the Day: Surefire Resources (SRN) +26.67% exploration target estimate propels Victory Bore vanadium project to world-class status.

COMPANY NEWS

• Weebit Nano (WBT) – Reports their product ReRAM IP is now available in SkyWater Technology’s S130 process, allowing customers to integrate the technology into their system-on-chip. The ReRAM technology offers benefits such as faster speeds, lower costs, higher reliability, and greater energy efficiency than other non-volatile memory solutions.
• InvoCare (IVC) – TPG Global has made an unsolicited, non-binding indicative offer (NBIO) to acquire IVC through a scheme of arrangement. The offer, which proposes that IVC shareholders receive $12.65 cash per share, has been accompanied by the news that TPG has acquired a 17.8% interest in the company. IVC’s board is now evaluating the proposal.
• Megaport (MP1) – Vincent English has resigned as CEO effective immediately, with the board to begin a search for a replacement as the company continues to face headwinds. MP1 has fallen over 60% from its 52-week high as it continues to face headwinds.
• Rio Tinto (RIO) has agreed to pay a $15m civil penalty to settle charges by the US SEC relating to a bribery scheme involving a consultant in Guinea. The SEC found that Rio hired a consultant to help retain its mining rights in Guinea and paid him $10.5m for his services, which Rio never verified.
• Challenger (CGF) has launched an offer for its new unsecured, perpetual convertible security to raise $250m. The proceeds from the offer will be used to fund a subscription for additional tier 1 capital of Challenger Life.
• Sayona Mining (SYA) is raising $54.9m in shares at a 34% premium to the last closing price. The offer is at 31.5c. Funds are to be used for the development of hard rock exploration projects in Quebec, Canada, as it transitions from an explorer to a producer and has a current market value of over $2bn.

ECONOMICS & OTHER NEWS

The RBA raised rates as expected by 25bps.

• The monthly CPI indicator suggests that inflation has peaked in Australia. Goods price inflation is expected to moderate over the months ahead due to both global developments and softer demand in Australia. Services price inflation remains high, with strong demand for some services over the summer.
• Growth in the Australian economy has slowed, with GDP increasing by 0.5% in the December quarter and 2.7% over the year.
• The labour market remains very tight, although conditions have eased a little.
• Wages growth is continuing to pick up in response to the tight labour market and higher inflation.
• The Board recognises that monetary policy operates with a lag and that the full effect of the cumulative increase in interest rates is yet to be felt in mortgage payments.
• The Board expects that further tightening of monetary policy will be needed to ensure that inflation returns to target and that this period of high inflation is only temporary.
• The Board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.

Read the full statement here:

• Australia’s trade surplus fell to $12.23bn in December 2022 due to a 1.4% fall in exports and a 1% rise in imports. This is the smallest surplus since August and below market forecasts of a $12.5bn gain. For the 2022 full year, the trade surplus was up to $139.5bn.

• Australian Consumer confidence dropped 0.1 point, remaining low for the fourth consecutive week at 79.9. Mortgage holders showing a rebound of 2.9, while confidence among those who own their home outright and renters declined by 2.2 and 0.4, respectively. The time to buy a major household item declined, while confidence about future financial and economic conditions improved.

OTHER NEWS

• CBA’s Matt Comyn expects banks to come under growing political pressure to pass on rate rises to deposit accounts. He has told the AFR Business Summit that only about a quarter of people think raising interest rates will slow or lower inflation. He had this to say about trading conditions. “If you go across the board … trading conditions are clearly really, really strong.”
• Bank of America (BoA) – There could be a surplus of lithium in 2023 as higher supply volumes are set to supersede slowing demand for the metal. They are expecting 38% lithium supply growth this year coupled with a slowing of Chinese demand from 95% to 22% this year.
• Tesla (TSLA) has reduced prices of its more expensive Model S and X cars in the US by 5.3% and 9.1%, respectively, following price cuts earlier this year. Tesla CEO Elon Musk said during the company’s investor day that demand for cars would “go crazy” as it made them more affordable.

ASIAN MARKETS

• China’s new foreign minister warned that soaring US-China tensions risk dire consequences for relations between the world’s two biggest economies.
• The Japanese PM has said that Japan will cease to exist if it can’t slow a fall in its birth rate that threatens to wreck the social safety net and economy. Last year twice as many people dies as were born. The proportion of people 65 or over rose to more than 29% last year.
• Japan’s H3 rocket self-destructs after 2nd-stage engine fails to ignite.

US AND EUROPEAN HEADLINES

• Powell kicks off two day Humphrey-Hawkins testimony.
• Meta said will cut thousands of employees as soon as this week, according to sources.
• Economist Nouriel Roubini warned that the global economy is at risk of a “hard landing” due to central bank efforts to gain control over persistently high inflation in advanced economies.Been saying this for as long as I remember.
• Kevin McCarthy set to meet Taiwan president.
• FTX’s trading affiliate Alameda sues Grayscale over crypto investments.

Clarence

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