Monday 8th May – Australian Market Wrap | Beeks Downunder-Because not all financial news is boring!

ASX 200 closed up 57 to 7277 (+0.8%) in a broad market rally. Energy sector soaring today +2.5% following news the government’s PRRT hike is not as bad as feared. WDS +2.9%, BPT +2.8%, and COE +6.7%. Lithium stocks were stronger today following Morgan Stanley’s comments that lithium markets have hit a turning point, MIN +1.4%, PLS +4.6%, and CXO +6.7%. Gold miners found some support down 0.7%. Staples also stumbled down 0.9%, EDV off 0.3%, and WOW slipping 1.1%. Banks recover some of last week’s losses, NAB leading the way up 2%, WBC +1.8%, CBA +1%, ANZ +0.1%, while MQG fell 2.2%. The Big Bank Basket rose 1.1% to $169.79. Tech steady, All Tech Index up 0.6%, WTC +0.2%, CPU +1.1%, and XRO +1.1%. REITS better up 0.4%. Resource stocks the place to be, BHP +1.5%, RIO +2.4%, and FMG +1.9%. Healthcare and Insurance mixed, RMD -0.9%, RHC +1.2% and MPL off 0.3%. In corporate news, WBC recorded 1H23 profit of $4bn, up 22%, CEO Peter Kings says the bank is ready for a downturn as its March NIM has plateaued and would fall in the coming half. LYC +12% Malaysian operating license extended until 2024. WOR +3.6% awarded engineering and design contract by Shell for Sparta. In economic news, NAB business confidence rose 1 point to 0 in April, the highest reading since January, and Australian building permits fell 0.1% MoM, reversing from 4% growth in February. March BoJ meeting minutes indicated thoughts that market distortions remained but did not worsen. Asian markets mixed, Japan down 0.2% and HK up 0.7% with China up 1.7%. Australia’s 10Y yield rose 7bps to 3.39%. Bitcoin down 1.28%. Dow Jones futures down 16 points and Nasdaq futures down 2 points.

HEADLINES

Winners: LYC, 360, CXO, INR, QAL, FCL, 29M, SLX, ILU.
Losers: SYR, SQ2, EHE, EMR, IMU, SWM, RSG.
Positive sectors: Banks. Insurers. Oil and gas. Iron ore. Lithium.
Negative sectors: Healthcare. Gold miners.
High 7292 Low 7244
Big Bank Basket: Bounces to $169.79 (+1.1%)
All-Tech index: Up 0.6%.
Gold falls to $2985.
Bitcoin: Falls to US$28216 on Binance woes.
Aussie Dollar: Better at 67.75c
10-Year Yield: Steady at 3.40%.
Asian markets: Japan down 0.2% China up 1.7% HK up 0.7%
US Futures: Dow down 14 NASDAQ down 2
European markets expected open higher. UK closed for Coronation Holiday.

MAJOR MOVERS

LYC +12.01% Amanda pulls it off. Malaysian licence extension. Macquarie moves to a buy.
CXO +6.74%, INR +5.80%, PLS +4.55% lithium bounces.
BOE +4.26% going nicely.
GT1 +10.00% RIU Investor presentation.
MAY +11.39% April sun in Cuba with Block 9 PSC program update.
IVZ +8.70% drill results.
GL1 +7.48% Macquarie favourite lithium play.
SYR -5.42% resumes SOP.
SQ2 -5.14% change in beneficial ownership.
EHE -4.94% bid looking worrisome.
MQG -2.17% broker comments
PBH -1.93% profit taking.
ANG -7.94% becoming a substantial holder.
TWR -7.63% updates guidance.
BET -6.45% slipping away.
MEI -6.25% Caldeira project drilling update.
Speculative Stock of the Day: Ora Gold (OAU) +50% – Crown Prince delivers further outstanding high grades.

COMPANY NEWS

Westpac Bank (WBC) – Reports a 22% jump in first-half profit to $4bn but anticipates a slowdown in credit growth due to higher interest rates impacting consumer spending. The bank’s net interest margins rose but remain below historic levels. Westpac plans to focus on higher-margin business lending in the second half and aims to manage downside economic scenarios while facing challenges from inflation and regulatory requirements.
Auckland Airport (AIA) – Introduces a retail bond offer of up to NZ$100m, with a maturity date of November 17, 2028, and an indicative margin range of 1% to 1.05% per annum. The bonds are anticipated to receive an A- credit rating from S&P Global Ratings.
Lynas Rare Earth (LYC) – Malaysian operating license for importing and processing lanthanide concentrate is extended until 2024, following appeals filed by the company. The license variation allows Lynas to operate its Malaysian facility without shutdown until the specified date, addressing concerns regarding operational limitations.
GQG Partners (GQG) – Experienced $US5.4bn in net inflows in the first four months of the year, with total funds under management rising to $US98.6bn by April 30 across all strategies, marking an increase from $US94.5bn at the end of March.
Qualitas Ltd (QAL) secured a mandate for $1bn investment in tranches in Australian commercial real estate private credit opportunities. $220m is available, and Qualitas will co-invest up to $30m. The mandate increases Qualitas’ total FUM to $6bn, of which 72% is CRE private credit for local and international institutional investors.
Base Resources Ltd (BSE) completed phase 1 drilling at Umba South prospect in Tanzania, confirming rutile mineralisation with 20% average heavy mineral content across 122 holes totalling 3,015m. Three geological domains were identified, including pyrite indicating dedicated tailings handling and storage required.
Talga Group Ltd (TLG) Vittangi Anode Project in Sweden is advancing, with the Luleå Refinery permit hearing concluded and a decision set for 21 June 2023. Building permits for the Refinery are granted, and an environmental permit for the Nunasvaara South natural graphite mine has been issued. Three parties have been granted an extension until 7 June 2023 to submit their appeal reasons.
Panoramic Resources Ltd (PAN) has announced significant mineralisation at its Savannah Nickel Project in WA, with drill results showing massive sulphide intersections. The company has completed a three-hole drill program to establish new DHEM survey platforms and test areas both above and below the 900 Fault at Savannah. The DHEM surveying is set to begin later in May and will cover areas down plunge and along strike from known mineralisation.
Red 5 Ltd (RED) announced that King of the Hills (KOTH) Gold Mine in WA delivered a second consecutive record gold production month, producing 18,633 ounces of gold in April 2023. The mine is expected to have a strong June 2023 quarter, with half-year production and cost guidance remaining consistent.
Worley (WOR) – awarded an engineering and design services contract by Shell for Sparta – a floating development in the Gulf of Mexico, offshore Louisiana.

ECONOMICS & OTHER NEWS

Building permits fell 31.10% YoY in February, falling further from the 8.1% fall recorded in January. Massive drop in Tasmania and SA.

Morgan Stanley believes lithium markets have hit a turning point. It noted that China carbonate prices have bounced 30% from their lows, and hydroxide prices have rebounded by 20%. It expected the recently oversupplied lithium market to become tighter again for the remainder of this year.

ASIAN MARKETS

Japan’s service sector has expanded at a record pace in April, a private survey showed. The services purchasing managers’ index was at 55.4, higher than March’s figure of 54.9 and marking its fifth straight month in expansion territory.
Japan’s composite PMI in April, – which combines the manufacturing and services sector figures, came in unchanged at 52.9.
Minutes from Japan’s March monetary policy meeting showed board members were concerned over inflation accelerating at a higher-than-expected pace.
China’s trade surplus is expected to have eased slightly from $88.2bn in March to $74.3bn in April, a Reuters poll of economists showed.
HSBC hits a 2-month high in HK after rejecting Ping Ang proposal.

US AND EUROPEAN HEADLINES

European markets expected to open slightly higher. UK holiday for King Charles III.
Binance had also halted Bitcoin withdrawals on Sunday for about 90 minutes, blaming congestion on the token’s blockchain. Then restarted withdrawals of Bitcoin after citing congestion on the token’s blockchain for two halts in less than 12 hours.
Tech groups call for changes to EU data-sharing proposals.
Germany unveils plan to subsidise 80% of energy intensive companies to the tune of around EUR30bn.

And finally….

Is it just me or is anyone else easily distrac……