There were no headwinds for the ASX today, despite evidence that another La Nina event is on its way that could affect the building industry and its insurers.
"Key atmospheric and oceanic indicators of the El Niño–Southern Oscillation (ENSO) show an established La Niña," the Bureau of Meteorology (BoM) said in an update.
"Models indicate this La Niña event may peak during the spring and return to neutral conditions early in 2023."
That’s the bad news, especially for communities that are still reeling from the last lot of extreme weather events.
The good news is the current performance of the ASX despite a range of factors that could (and have) bring it down.
The S&P/ASX200 gained 49.20 points or 0.71% to 7,013.70, crossing above its 20-day moving average. Over the last five days, the index has gained 2.74%, but is down 5.79% for the last year to date.
Top-performing stocks were Chalice Mining Ltd (ASX:CHN, OTCQB:CGMLF) up 9.33% and Novonix Ltd (ASX:NVX) up 7.08%.
Lithium stocks helped the ASX higher as well after broker upgrades and strong demand.
Pilbara Minerals was 3.61% higher to $4.79, taking total gains for the calendar year to just over 35%. Core Lithium Ltd (ASX:CXO) rose 4.09%, Allkem gained 2.58% and Liontown Resources (ASX:LTR) was 1.14% higher.
The price of the commodity last traded at 497,500 yuan ($104,643).
Of the sectors, Energy lifted 1.11%, Consumer Discretionary was 1.23% higher, Financials rose 1.01%, Utilities was 1.15% higher and Real Estate gained 1.60%. The only sector in the red was Health Care which fell 0.77%.
Future’s so bright
The future outlook for the S&P/ASX200 is strong. CommSec believes the benchmark S&P/ASX 200 index could trade in a 7,100-7,400 point range by the June quarter in 2023 – 10% over the year.
That said, inflation, interest rates and cost of living will continue to have an effect.
"Research analysts are expecting weaker earnings growth this financial year and next as the economy slows. Company profit margins are likely to be squeezed by higher costs, de-stocking and discounting due to elevated inventory levels as supply chain disruptions ease," Commsec chief analyst Craig James said.
"For investors, it will simply be a case of analysing which companies respond best to the challenges," he says.
Bad news, good result
Also helping the ASX higher was the Star Entertainment Group, which jumped more than 4% after coming out of a trading halt.
Surprisingly, shares bounced after the NSW casino regulator issued Star with a “show cause notice” following the Bell Report finding that it is unfit to operate a casino licence in NSW.
NSW Independent Casino Commission chief commissioner Philip Crawford said the commission was now assessing the type of action to take against Star, including tearing up its licence.
Crawford said the group was guilty of “institutional arrogance”.
The company has 14 days to respond before disciplinary action is taken.
Star says it "intends to respond to the notice within 14 days".
"The Star is currently considering the report and the matters raised in the notice," the company said.
Inquiry head Adam Bell said SC’s review found widespread misconduct and blamed Star’s executives for the group’s bad behaviour, some of who have already left the building.
“There’s been people removed from the company. It’s not a matter of sacking a number of chief executives and saying everything is right again,” Bell said.
Another inquiry is now necessary to look into Star’s executives separately.
“The police are investigating a range of issues to do with individuals, in terms of breaches of the Casino Control Act,” he said.
The inquiry took four months to complete, but it is unlikely to be stripped of its licence. Instead it will have to tighten self-reporting requirements while in-house lawyers undergo “independent and specific training on legal professional privilege and when it can and cannot be claimed”.
Training in conflict of interest and responsible gambling should also be on the agenda, while a no cash in the casino policy should be introduced.
Bell recommended the watchdog take action over breaches of anti-money laundering protections in the VIP rooms and cash cages connected to Suncity.
Of management, Bell said, “A number of extremely serious governance, risk management and cultural failures of The Star entities occurred over, and indeed before the commencement of, the relevant period.
“Management repeatedly chose to run risks rather than avoid or contain them. Too often the question which was asked was ‘how can we do this?’ rather than ‘should we be doing this?’.”
And that’s what gets you a 4% bump.
Good news, bad result
On the flipside, Seven West Media Ltd (ASX:SWM) fell 2% … after good news.
The Seven Network has signed a deal to broadcast the TV Week Logie Awards from 2023.
Investors weren’t happy about it, which is surprising as it would bring in ratings and advertising dollars.
It may even make the awards ceremony more relevant to Australian TV lovers.
Or not … perhaps that’s why its shares fell.
“The TV Week Logie Awards are more than television’s night of nights, they are a treasured Australian institution and a celebration of Australia’s love of television,” Seven West Media managing director and chief executive officer James Warburton said in an issued statement.
“It’s early days but we have big, exciting plans for the awards in 2023 and beyond."
It hasn’t been a good year for Seven West which is down 23.5% for the calendar year.
Crypto markets rally as The Merge looms
The coming Ethereum merge has seen crypto assets rise. eToro’s Simon Peters said, “Cryptoasset markets have staged a rally in the past week as we enter the final 72 hours ahead of The Merge of the Ethereum network. The event is focusing all minds in the sector as investors and users wait to see its impact on the market.
“Last week, ether, the token associated with the Ethereum blockchain, rallied around 10% across the week, despite falls on Wednesday. The token began the week trading around US$1,560 before falling below US$1,500 midweek. From that point it rallied to now trade just below US$1,720.
“Bitcoin meanwhile saw its price jump too. Having begun the week just below US$20,000, it fell to sub-US$18,500 before rallying to now trade around US$21,600 - an increase of around 8% over seven days. Talk has abounded of a so-called ‘short squeeze’ on bitcoin with bullish investors piling in to take on short sellers”.
This week a raft of economic data could move prices, with the US inflation indicators most likely to shift the dial.
Meanwhile, Peters said there was growing evidence of a bear market for crypto.
“As the market moves through ongoing troubled times, the examples of institutional ‘bear building’ - where major players take stakes in assets at favourable prices - are growing.
“One of the most influential players in the space, Michael Saylor’s Microstrategy, has announced its intention to sell US$500 million in stock in order to fund more cryptoasset acquisitions. This is a not uncommon move in such market conditions to provide liquidity to buy assets viewed as undervalued - which Saylor clearly thinks with his bitcoin strategy.
“Elsewhere, a State Street (NYSE:STT) executive Irfan Ahmad made comments with an Australian news outlet Sydney Morning Herald saying that despite volatility the firm’s clients were still buying into the space. With such an array of projects and growing sophistication of the sector, Ahmad says the firm’s clients have been asking pragmatically about how they can gain more access to the sector.”
The five at five
International Graphite highlights Springdale’s potential with discovery of new shallow, high-grade graphite prospect
“These exploration results are exceptional and confirm the use of electromagnetic geophysical survey data to highlight the substantial graphite mineralisation potential across our Springdale tenements and the potential for significant resource growth at the project,” International Graphite Ltd (ASX:IG6) executive chair Phil Hearse said.
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Magnetite Mines (ASX:MGT) plans to more than double iron ore output at Razorback to meet growing demand
“In raising its sights, the company is responding to direct evidence of rapidly evolving market conditions associated with the decarbonisation requirements of the iron and steelmaking industry," said Magnetite Mines (ASX:MGT) Ltd new chief executive officer Tim Dobson.
Read more
Critical Resources returns highest-grade results yet from Mavis Lake Lithium Project in Canada
Critical Resources Ltd (ASX:CRR) has received the highest-grade lithium results yet from the Mavis Lake Project in Ontario, Canada, with assays of up to 4.32% lithium oxide.
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GTI Energy mobilises rigs to ISR uranium project in Wyoming for 100,000-foot drill program
“The drilling is sequenced across the five project areas to deliver the full 100,000-foot program prior to Christmas," GTI Energy Ltd (ASX:GTR) executive director Bruce Lane said.
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Magmatic Resources returns best-yet assays from Myall; diamond drilling extended
“To be able to announce such outstanding results in our first completed hole of the program is simply remarkable, and it has already gone a long way in demonstrating the size and grade potential of the system," said Magmatic Resources Ltd (ASX:MAG) managing director Dr Adam McKinnon.
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On your six
Johnson & Johnson (NYSE:JNJ) reaches $205 million settlement in Australian pelvic mesh class action
The settlement, which Shine Lawyers said was the largest settlement in a product liability class action in Australian history, follows multiple court proceedings involving more than 11,000 claimants, the pharmaceutical giant, and its subsidiary Ethicon.
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The one to watch
Cedar Woods Properties with Proactive at the ASX Small and Mid-Cap Conference
Cedar Woods Properties Ltd (ASX:CWP) managing director Nathan Blackburne speaks with Proactive at the ASX Small and Mid-Cap Conference September 2022.
Watch