The ASX jumped higher today as miners and banks led the way.
The S&P/ASX200 gained 81.00 points or 1.21% to 6,800.90 after setting a new 20-day low. Over the last five days, the index has lost 2.98% and 6.17% over the last 52 weeks.
Top-performing stocks in this index are New Hope Corporation Ltd up 8.97% and Brickworks Ltd up 5.80%.
On the red side of the ledger, Fortescue (ASX:FMG) Metals Group Ltd was down around half a per cent, despite iron ore prices increasing. More on that shortly.
As for the sectors, Materials was the best performed up 2.60%, with Energy up 1.92% and Utilities up 1.23%. Health Care was one of only two sectors in the red, down 0.25%, with Real Estate minus 0.46%.
Over the last five days, all sectors are in the red.
What’s making news
More decarbonisation details – FMG shares plunge
Fortescue was reeling from Andrew Twiggy Forrest’s pledge to eliminate fossil fuel use and achieve real zero terrestrial emissions across its iron ore operations by 2030.
It’s a big call, which will cost Fortescue US$6.2 billion (A$9.2 billion).
"The capital expenditure to purchase the fleet will be aligned with the scheduled asset replacement life cycle and included in Fortescue’s sustaining capital expenditure. Studies are underway to optimise the localised wind and solar resources," Fortescue said.
Fortescue is a founding member of US President Joe Biden’s First Movers Coalition. Its decarbonisation strategy for the group’s iron ore operations is expected to cut the company’s CO2 emissions by three million tonnes a year and slash operating costs by US$818 million (A$1.2 billion) annually.
Cost savings will come via the elimination of diesel, natural gas and carbon offset purchases from its supply chain.
The company forecasts cumulative cost savings of US$3 billion (A$4.46 billion) by 2030, leading to a payback of capital by 2034.
Forrest made his decarbonisation announcement in New York at a CEO roundtable on the invitation of the First Movers Coalition and the United Nations Global Compact plan.
“There’s no doubt that the energy landscape has changed dramatically over the past two years and this change has accelerated since Russia invaded Ukraine,” Forrest said.
“We are already seeing direct benefits of the transition away from fossil fuels - we avoided 78 million litres of diesel usage at our Chichester Hub in FY22 - but we must accelerate our transition to the post-fossil fuel era, driving global scale industrial change as climate change continues to worsen.
“It will also protect our cost base, enhance our margins and set an example that a post-fossil fuel era is good commercial, common sense.”
Forrest is confident Fortescue can capitalise on its first mover advantage.
“Fortescue - FFI and FMG - is moving at speed to transition into a global green metals, minerals, energy and technology company, capable of delivering not just green iron ore but also the minerals, knowledge and technology critical to the energy transition,” Forrest said.
“Consistent with Fortescue’s disciplined approach to capital allocation, this investment in renewable energy and decarbonisation is expected to generate attractive economic returns for our shareholders through energy cost savings and a sharp reduction in carbon offset purchases, together with a lower risk cost profile and improvement in the integrity of our assets.”
Shareholders must play the long game.
Fuel excise reintroduced next week
Petrol users are bracing themselves for the return of the fuel excise next Wednesday. That’s an extra 23 cents added to the fuel price.
However, Treasurer Jim Chalmers says that Australians will not see the effects of the reintroduction immediately. Now, will they bounce back to July peaks.
“The drop from the peak is greater than 50 cents at the moment," Dr Chalmers said.
"We need to remember that as well. Most people understand that the budget can't afford to keep the excise cut going forever. People are preparing for the fact that they return to the normal setting.
“Today you would have seen industry estimates that there would be more than 700 million litres of lower excise fuel in the system when the fuel excise is regionalist. This is 700 million reasons why the price should not shoot up by the full 23 cents.”
Rate hikes set to slow
The Reserve Bank of Australia minutes point to a slowdown in rate hikes.
"The size and timing of future interest rate increases will continue to be guided by the incoming data and the board’s assessment of the outlook for inflation and the labour market, including the risks to the outlook," the Minutes say.
"All else equal, members saw the case for a slower pace of increase in interest rates as becoming stronger as the level of the cash rate rises.
"The board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time."
While a slowdown in increases is good, there are still hikes to come. The question is by how much, with the board saying, “a further increase in interest rates would help bring inflation back to target and create a more sustainable balance of demand and supply in the Australian economy."
City Index is predicting a 25-point hike.
"Our base case, as outlined here in early August, is for a 25bp rate hike in October, which would see the cash rate rise to 2.60%, into mildly restrictive territory before year-end," City Index senior analyst Tony Sycamore said.
"The RBA is likely to pause then to allow time to assess the full impact of the rate hiking cycle on inflation, growth, and labour market data."
Five at Five
Yandal Resources’ maiden resource at Parmelia boosts total gold inventory to 404,000 ounces
Yandal Resources Ltd (ASX:YRL) managing director Tim Kennedy said: “We are very much looking forward to our next round of drilling which will test the expansion potential at each deposit as we continue the process of unlocking the inherent value of the Mt McClure project.”
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Antilles Gold adds to high-grade gold-silver haul from La Demajagua in southwest Cuba
Final assays from Antilles Gold Ltd (ASX:AAU, OTCQB:ANTMF)’s 28 drill holes in the completed 29,000-metre program returned high-grade results such as 13 metres at 10.3 g/t gold and 49.2 g/t silver from 172 metres including 3 metres at 29.9 g/t gold.
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Tietto Minerals hits 195.53 g/t gold in step-out drilling at Abujar
Tietto Minerals Ltd (ASX:TIE) remains on track to realise its first gold production by the December quarter this year and to produce 260,000 ounces of gold in 2023.
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Latrobe Magnesium investing $39 million for Stage 1 of 'green' magnesium production plant in regional Victoria
Latrobe Magnesium Limited (ASX:LMG)'s Stage 1 facility, which is being supported by the Victorian Government’s Regional Jobs Fund, will be built by June next year to treat brown coal fly ash from the Yallourn Power Station, currently a waste resource from power generation.
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archTIS launches NC Encrypt to address growing demand for independent encryption key management
archTIS Ltd has launched NC Encrypt, its new independent encryption key management and bring your own key (BYOK) support for Microsoft (NASDAQ:MSFT) 365 applications and SharePoint Server environments.
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