ASX 200 closed up 63 to 7358 (+0.9%), rising for its seventh consecutive session, supported by interest rate cuts out of China propping up commodities as well as positive RBA meeting minutes that revealed policymakers were less hawkish on more rate hikes than previously thought. Energy and mining stocks led the advance today, WDS rose 2.2%, STO up 2.3%, BHP +1.3%, and PLS +2.5%. REITS did well, up 1.3%, buoyed by a less hawkish RBA, SCG up 1.5%, GMG up 1.0% and VCX gaining 1.6%. Banks stronger, with the Big Bank Basket up to $173.35 rising 1.2%. NAB leading the charge up 1.7%. WBC also in demand up 1.3% with insurers doing ok, QBE up 1.6% and SUN better by 1.6%. Tech rode the broad market rally. All-Tech Index up 0.3%, CPU up 0.7% and XRO rose 1.4%. Defensive sectors outperformed. Healthcare stocks were mixed, CSL off 0.3% and RMD up 0.4%. Industrials were strong today, WOW up 1.0%, and ALL up 1.6%. Lots on the corporate front today, BST -0.3% reported an 11.7% fall in sales and significantly reduced NPAT guidance for H2 FY23, ASX +1.0% on management restructure, LLL +4.2% upgraded resource estimates by 48.2%, WDS +2.2% invests in Trion oil project in Mexico, LRS announced a 241% increase in resource estimate for the Colina Deposit, and ZIP -1.1% gained approval from convertible note holders to amend terms allowing the company to reduce its debt by $192m. In economic news, the PBoC slashed two key lending rates for the first time since August 2022 in line with expectations. One-year LPR lowered 10bps. Asian markets are down, Japan down 0.3%, HK down 1.7%, and China off 0.2%. Long-dated bond yields rise while the 2Y yield fell, Australian 10Y yield up to 4.01%. Bitcoin up 0.62%. Dow Jones futures down 141 points, and Nasdaq futures down 41 points.

HIGHLIGHTS

  • Winners: CTT, MFG, RF1, GRR, 360, LLL, CCP
  • Losers: LKE, RED, NVX, MYR, PMV, AX1, ALX
  • Positive sectors: Banks. REITs. Oil and gas. Iron ore. Consumer.
  • Negative sectors: Utilities
  • High 7368 Low 7296.
  • Big Bank Basket: Higher at $173.35 (+1.2%)
  • All-Tech index: Up 0.3%
  • Gold better at $2865
  • Bitcoin:  Rallies to US$26940
  • Aussie Dollar: Slips on RBA minutes to 67.97c
  • 10-Year Yield: Steady at 4.01%.
  • Asian markets: Japan down 0.3%, HK down 1.7%, and China off 0.2%
  • US Futures: Dow down 141 Nasdaq down 41.
  • US markets back from long weekend.

MAJOR MOVERS

  • CTT +8.1% retail back in spots.
  • MFG +5.8% leveraged play on equity market rally.
  • LLL +4.2% resource upgrade.
  • RF1 +5.7% Daily buy back notice. NTA 288c.
  • GRR +4.7% iron ore bounce on Chinese stimulus.
  • KGN +2.4% online retail in demand.
  • WDS +2.2% Si a Mexico.
  • SXL +20.4% ARN strikes.
  • 29M +14.4% oversold bounce.
  • DRE +7.8% highly conductive anomalies.
  • LKE -19.7% not like.
  • BRN -2.5% tax loss selling.
  • PMV -4.1% ex-dividend.
  • ONE -unchanged gives it all away the rallies late.
  • DLI -8.2% runs out of road.
  • AX1 -3.8% retails patchy.
  • ALX -3.6% higher ECB rates.
  • Speculative Stock of the Day:  Nothing on any volume today.Gold Mountain (GMN) +50.0% no announcements, not huge volume.

COMPANY NEWS

  • Latin Resources (LRS) – Announced a significant 241% increase in the JORC Mineral Resource Estimate for the Colina Deposit.
  • Woodside Energy (WDS) – Approved investment in Mexico’s Trion oil project, targeting oil production by 2028. Expected to have a total capital expenditure of $7.2bn and with a production capacity of 100,000 barrels per day.
  • Arafura Rare Earths (ARU) -Received an indicative letter of interest (LOI) from Export Development Canada for potential debt financing of up to US$300m to support the Nolans Project.
  • ASX Group (ASX) – Executive Tim Hogben is leaving after 23 years, to be replaced by Clive Triance from FIS. Lisa Green, Group Executive of People and Culture, is also leaving ASX after eight years.
  • Leo Lithium Limited (LLL) – Announced a substantial upgrade to the Mineral Resource Estimate (MRE) at its Goulamina Lithium Project in Mali, increasing the total resource tonnage by 48.2%. The upgrade positions Goulamina as the 5th largest global spodumene deposit.
  • Regis Resources (RRL) – Reported that its underground reserves have exceeded depletion for the second consecutive year, indicating extended mine life at the Duketon and Tropicana projects.
  • Best & Less Group Holdings (BST) – Reported a 11.7% decrease in total sales for the five trading weeks ending June 18. BST expects NPAT of $3.6m to $4.2m for H2 FY23, lower than previous guidance of $10m to $12m. BBRC has acquired approximately 66.46% voting power in BST with an off-market takeover offer.
  • Downer Edi Ltd (DOW) – Sale of Australian Transport Projects business to DT infrastructure completed.
  • Centuria Capital Group (CNI) – Acquires Busselton Boulevard Shopping Centre in Western Australia for $16m, establishing a new single-asset wholesale property fund.
  • Talga Group (TLG) – Secured €150m senior debt funding from the European Investment Bank for its Vittangi Anode Project in Sweden. The project aims to produce green anode for lithium-ion batteries using renewable electricity.
  • SRG Global (SRG) – Secured a specialist civil contract worth approximately $50m with Water Corporation WA to construct wastewater infrastructure assets.
  • Kingsgate Consolidated Ltd (KCN) – Reported significant additional intercepts at Chatree Gold mine in Thailand.
  • Fineos Corporation Holdings Plc (FCL) – Provided additional details on its five-year contract with Guardian Life. First year revenue expected to be $10-14m.
  • ZIP Co Ltd (ZIP) – Received approval from convertible note holders to amend terms allowing the company to reduce its debt by $192m, strengthening its balance sheet. Amendments to become effective following EGM on 31st July.
  • European Lithium Ltd (EUR) – Trading halted, pending an announcement regarding the finalisation of the acquisition of Austrian lithium prospective tenements and assay results in respect to tenements being acquired.
  • Queensland Pacific Metals Ltd (QPM) – Lava Blue’s Demonstration Plant in Queensland has produced 4N HPA from an aluminium hydroxide source. This milestone achievement of kilogram batches with over 99.99% purity is a crucial step towards commercial production.
  • Clarity Pharmaceuticals Ltd (CU6) – Started its clinical trial, called COMBAT, in the US to evaluate the safety and effectiveness of their 67Cu-SAR-Bombesin product in patients with metastatic castrate-resistant prostate cancer (mCRPC).

ECONOMIC & OTHER HEADLINES

RBA MEETING MINUTES SUMMARY

  • Economic activity in Australia has slowed, and the new policies announced in the government budget have not had a significant effect on economic forecasts.
  • Household consumption growth has been subdued, with retail volumes declining and household financial pressure increasing.
  • The labour market remains tight, but conditions have eased slightly, and wage growth is in the range of 3.5% to 4%.
  • The lack of productivity growth is a concern for inflation outlook.
  • Market expectations for central bank policy rates have shifted higher due to stronger-than-expected inflation and labour market data.
  • Increases in the cash rate have led to higher lending rates and scheduled mortgage payments, which are expected to rise further.
  • Inflation remains above target and is projected to return to the top of the target range by mid-2025.
  • There are risks and uncertainties associated with staying on the current path, including the potential for inflation expectations to rise and high inflation becoming more persistent.
  • There is a risk of the economy slowing and unemployment rising more than expected due to the slowing economy, falling real disposable incomes, and tightening financial conditions.
  • Downside risks to inflation include falling commodity prices, declining international shipping costs, and the moderation of headline inflation.
  • Upside risks to inflation include higher-than-expected monthly inflation, less moderation in services price inflation, and potential wage and price indexation.
  • The majority agreed that a rate increase was warranted to address inflation risks and maintain the target. They emphasised the need to monitor household spending and economic developments closely.

The market is taking it that July is more likely to be a pause given the line-ball nature of the June rate hike.

  • RBA deputy governor Michele Bullock spoke at a conference after the minutes were released and said inflation would not return to the central bank’s 2 to 3% target band without a sustained period of below-trend employment growth. Ms Bullock said an unemployment rate around 4.5% was around the lowest possible level consistent with the RBA’s inflation target.
  • New Zealand’s government has announced an inquiry into its banking sector amid concerns that lenders are making excessive profits. Australian banks hold around 90% of the NZ market. four biggest banks are all units of Australia’s major lenders, which together hold about 90% of deposits. ANZ and WBC operate under their own brands, while CBA owns ASB Bank and NAB controls Bank of New Zealand.

ASIAN MARKETS

  • The Chinese central bank cut the one-year loan prime rate by 10bpsfrom 3.65% to 3.55%, and trimmed the five-year loan prime rate by 10 basis points from 4.3% to 4.2%, for the first time since August. Seems some were a little disappointed the cut was so slight.
  • China’s CATL leads with a US$1.4bn lithium investment in Bolivia.  The country hosts the world’s largest identified lithium deposits but produces only a tiny amount so far. The group will build two facilities to make lithium chemicals with a combined production capacity of about 200,000 tons a year.
  • Eddie Wu will succeed Daniel Zhang as chief executive of Alibaba. Wu is one of Alibaba’s co-founders and currently chairman of Taobao and Tmall Group.

US AND EUROPEAN HEADLINES

  • US back tonight. Blinken calls for further dialogue with China.
  • German May PPI down 1.4% M/M v down 0.7% forecast. Up 1.0% Y/Y v 1.7% forecast. weak energy prices helping.
  • No sign yet of the Titanic submersible.
  • Airbus strikes record deal to sell 500 planes to India’s IndiGo. Paris Air Show continues.
  • UBS faces millions of dollars in fines after Archegoes Capital issue.

And finally…..

Clarence

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