Resource Data

Stocks retreat as data on China falls short – The Market Herald

Australian stocks eased for a second day as the high-flying lithium mining sector struggled and Chinese economic data disappointed.

The S&P/ASX 200 fell five points or 0.07% to 7142.

Declines in real estate and resource stocks offset advances in healthcare providers, technology stocks and some banks. A well-received trade update from Commonwealth Bank helped shield the market from a bigger loss.

What moved the market

The market fell for a second day on profit taking on Wall Street in the wake of the best US week since June. The S&P500 fell 0.89% after the Federal Reserve warned that interest rates needed to go further to control inflation.

Resource stocks fell just as gently Chinese data highlighted the impact of Covid restrictions on economic activity last month. Retail sales contracted 0.5% year-over-year as several cities entered partial shutdowns. Factory activity increased less than expected. Sales of residential properties fell.

“The photo shows that the Covid measures in October affected consumer behavior even though it was a month containing long holidays,” said Iris Pang, ING’s chief economist for Greater China.

“Covid measures were eased on November 11, which should allow for a moderate recovery in retail sales.”

Asian markets rallied on the prospect of further support for the Chinese economy following recent moves to ease Covid restrictions and help the housing market. Hong Kong’s Hang Seng jumped 3.62%. The Shanghai Composite gained 1.27%. The Asia Dow strengthened by 1.45%. Japan’s Nikkei added 0.15%.

Back home, the reserve bank reaffirmed its willingness to return to half-point interest hikes if necessary. Minutes from this month’s monetary policy meeting showed that the bank considered raising the cash rate target by 50 basis points before opting for a smaller increase of 25 basis points. In the end, the board felt it was more important to act consistently by opting for a second straight 25bp hike.

“After moving 25 basis points the previous month, they questioned whether the flow of information since then warranted a 50 basis point move at the November meeting. The Board agreed that acting consistently would build confidence in monetary policy among financial market participants and the community at large,” the minutes read.

However, “members did not rule out returning to larger increases if the situation warranted it. Conversely, the Commission is prepared to keep rates unchanged for some time while it assesses the state of the economy and the outlook for inflation. Interest rates do not follow a predefined trajectory.

A weekly measurement of consumer confidence registered its first increase since the end of September. The ANZ-Roy Morgan confidence index improved by 2.7%.

winner’s circle

The largest of the big four banks, ABC, rose 1.31% after boosting its first-quarter cash profit 2% to $2.5 billion. Improved margins and volume growth helped the bank increase revenue by 9%. Expenses increased by 4.5%, mainly due to higher staff costs.

“In a competitive environment, we remained disciplined and delivered good volume growth in our core markets,” said CEO Matt Comyn.

Westpac advanced 0.46%. Macquarie gained 1.07%. Other the heavyweights rise includes James Hardie +2.01%, CSL +1.47% and Telstra +0.52%.

Record net profit of $1.027 billion for the full year Pivot Incitec 5.88 percent. Profits rose 162% to $1.485 billion.

Single Malt climbed 4.49% after reaffirming full-year earnings guidance. Maltster expects ‘significant increase in profit in FY23’ after adverse market conditions including drought in Canada, supply chain issues and rising transport costs , impacted its FY22 results.

Elders rebounded 4.7% after yesterday’s bloodbath. Agribusiness fell nearly 23% yesterday after warning that unfavorable weather conditions threatened summer and winter crops.

App Creator Life360 posted a 9.82% gain after its biggest quarterly increase in users, an increase of more than five million. The company’s loss in the third quarter exploded to $9.4 million from $3.7 million in the prior corresponding period.

Doghouse

lithium miners fell sharply on global peer pressure amid reports of cathode producers slashing production targets. Overnight, the Global X Lithium and Battery Tech ETF fell 2.6% from a two-month high.

Metal battery producers were among the best performers this year. Several major Australian companies hit historic highs yesterday after China eased Covid restrictions.

basic lithium reversed 15.82% today from yesterday’s record high close. Sayona Mining fell 9.62%, Pilbara Minerals 8.7%, Lake Resources 7.66% and Liontown Resources 6.82%. Nickel miner IGO fell 7.36%.

Allkem fell 12.36% despite reporting the first lithium hydroxide production from a joint venture in Japan. This morning’s AGM also learned that the miner was on track to meet its annual production guidance for this fiscal year.

Lynas Rare Earths lost 8.2% after Macquarie Group downgraded its rating to ‘neutral’.

AGL fell 1.17% as competition for control of the energy giant’s future direction intensified. Four directors proposed by Mike Cannon-Brookes were elected to the board this morning, three of them against the advice of the current board. Cannon-Brookes controls nearly 11.3% of the company and is pushing for a faster transition to greener power generation.

“The Board welcomes these new directors to the Board and will work constructively with them in the best interests of shareholders,” Chair Patricia McKenzie said at today’s AGM.

mall operator Neighborhood centers slid 1.79% after the appointment of chief operating officer Peter Huddle as interim CEO.

GPA ended flat after being warned of a delay in completing the sale of its real estate and domestic infrastructure investment business from Collimate Capital to Dexus and its international infrastructure investment business to DigitalBridge. Regulatory bottlenecks may delay the conclusion of sales beyond the end of the month.

Other markets

US Futures Contracts bounced back from last night’s slide. S&P 500 futures climbed 17 points or 0.42%.

Oil added to last night’s 3% drop, which followed a drop in global demand from OPEC. Brent crude fell 26 US cents or 0.3% to US$92.88 a barrel.

Gold fell from its highest level since mid-August. The yellow metal fell US$2.90 or 0.16% to US$1,774 an ounce.

The dollar edged up 0.03% to 66.95 US cents.