ASX trading flat after erasing early morning weakness

The S&P/ASX 200 traded flat by midday in Sydney after spending much of the morning in negative territory. The benchmark erased early losses after opening 0.5 per cent lower and briefly touched positive territory just before midday. Real estate shares led the recovery with a 1 per cent gain, while tech companies climbed 0.9 per cent and financials eased 0.6 per cent higher. Energy was the day’s laggard, down 1.6 per cent.

Energy companies felt the brunt of early selling, falling 1.6 per cent. Paladin Energy (ASX:PDN) dropped 4.82 per cent, the second-worst decline among the largest 200 listed companies. Santos Energy (ASX:STO) fell 2.62 per cent, while Woodside Energy (ASX:WDS), the largest company within the sector, declined 1.38 per cent.

At noon, the S&P/ASX 200 is 0.12 per cent or 8.00 points lower at 6786.30.

The SPI futures are pointing to a rise of 12 points.

Global markets

US equities were higher overnight in fairly choppy trading, finishing slightly off their best levels. The Nasdaq Composite rose on Thursday as Tesla shares surged on the back of better-than-expected earnings results. Tech stocks also got a boost from a softer US dollar.

The tech-heavy Nasdaq gained 1.36 per cent to close at 12,059.61. The S&P 500 added 0.99 per cent to finish at 3,998.95. Meanwhile, the Dow Jones Industrial Average gained 162.06 points, or 0.51 per cent, in a choppy session. The blue-chip index ended at 32,036.90.

The Nasdaq is set for a gain this week, up about 5.3 per cent. Meanwhile, the Dow is nearly 2.4 per cent higher for the week, while the S&P 500 climbed 3.5 per cent.

Investors continued to pivot into tech stocks, which have fuelled this week’s rally, as some strong corporate results had Wall Street on the hunt for beaten-down assets.

After market Snap shares plunged 25 per cent following softer-than-expected sales and an ad slowdown warning.

US future contracts are swinging lower after hours, currently trading 0.8 per cent lower.

Asian equities are steady Friday, with the Nikkei 0.03 per cent higher and the Kospi 0.33 per cent higher.

Macro headwinds are in focus after disappointing US initial claims and Philly Fed data seemed to play into recession concerns.

ECB’s larger-than-expected rate hike reinforced expectations of aggressive central bank tightening (and risk of a policy mistake).

At the same time, the “peak inflation” narrative continues to support risk assets amid a continued pullback in dollar and oil that has raised hopes the central bank tightening cycle will end sooner than thought.

On the economic front, Japan core inflation rose in line with consensus but below BOJ’s upwardly revised target for FY22. This comes after the central bank maintained easing bias on Thursday amid expectation inflation will moderate.

Elsewhere, the South Korean PPI inflation quickened in June amid surging manufacturing costs. Recall that the BOK hiked by an outsized 50 bp in July but intends to moderate pace of tightening back to 25 bp.

Best and worst performers

The best-performing sector is Real Estate Investment Trusts, up 0.89 per cent. The worst-performing sector is Energy, down 1.76 per cent.

The best-performing stock in the S&P/ASX 200 is Zip Co (ASX:ZIP), trading 13.55 per cent higher at $0.88. It is followed by shares in Telix Pharmaceuticals (ASX:TLX) and Novonix (ASX:NVX).

The worst-performing stock in the S&P/ASX 200 is Coronado Global Res (ASX:CRN), trading 7.50 per cent lower at $1.48. It is followed by shares in Domino Pizza Enterprises (ASX:DMP) and Webjet (ASX:WEB).

Local economic news

Bonds are mixed, with Australian and New Zealand yields sharply lower across the curve.

Treasury rates are higher at the front end.

There is a reversal in FX markets, with the Euro weakening and the dollar rebounding against other currencies.

There are muted moves in commodity markets.

Gold is trading at US$1716.86 an ounce.
Iron ore is 1.2 per cent lower at US$96.40 a tonne.
Iron ore futures are pointing to a rise of 0.60 per cent.
One Australian dollar is buying 69.22 US cents.

Company news

Ioneer (ASX:INR) has signed a five-year binding offtake agreement with Ford. Under the agreement, Ioneer will deliver 7k tonnes per annum of lithium carbonate to Ford over a five-year term, starting in 2025. Ford intends to utilise Ioneer’s lithium carbonate to produce batteries for use in Ford electric vehicles through BlueOval SK on battery manufacturing JV. Ioneer is expected to produce an annual average of 21k tonnes of lithium carbonate / hydroxide over the Rhyolite Ridge project’s 26- year life. Ioneer’s CEO, Bernard Rowe, said: ”The full binding offtake agreement with Ford is a significant milestone for Ioneer, highlighting the mature state of the Rhyolite Ridge project development and its ideal position to serve US supply chain with domestic battery materials. Put simply, this strategic relationship means Nevada Lithium for American cars, and it will lead to job creation across all levels of the electric vehicle supply chain within the United States. We look forward to working and continuing to work with Ford and its partners to develop a secure and reliable end-to-end U.S EV industry”. Shares in INR are currently trading up 5.4 per cent at 52.2c.

Insurer IAG (ASX:IAG) is on track to report $347 million in net profit after tax for the 2022 financial year, a sharp uptick from the $427 million loss in the prior financial year. Despite the profit, the company’s profit from insurance of $586 million came in with a margin of 7.4 per cent, below the company’s prior guidance of 10 per cent to 12 per cent. In the 2021 financial year, the insurance profit margin was 13.5 per cent. The drop in margin, which may worry investors, reflects “net natural peril costs” of $1.1 billion, $354 million more than initially earmarked. The company also pointed to “prior period reserve strengthening” of $172 million and negative credit spread impacts of $45 million. Shares in IAG are currently trading down 1.41 per cent at $4.21.

Brickworks (ASX:BKW) says it expects to report record property earnings as it launches Brickworks Manufacturing Trust with Goodman Group. The joint venture involves the sale of a 49.9 per cent interest in the trust — housing 15 operational sites — to Goodman, for $280m, delivering gross proceeds of $207m. The assets comprise 496 hectares with a gross asset value of $416m. All sites will be tenanted by Brickworks subsidiaries on long-duration leases. Brickworks says “there remains significant development opportunities and valuation upside” across its property portfolio. Shares in BKW are currently trading up 1.89 per cent at $20.51.

INOVIQ (ASX:IIQ) announced today that United States of America Patent No 11,391,738, entitled “Method of detecting cancer”, was issued by the United States Patent and Trademark Office to Sienna Cancer Diagnostic Ltd, a subsidiary of INOVIQ. US patent 11,391,738 is due to expire on 11 March 2035 and claims use of the Company’s telomerase antibody to resolve inconclusive cytology and detect malignant cells. CEO Dr Leearne Hinch said: “This application is a continuation of US patent 10,338,072 and provides additional coverage of our hTERT assay for telomerase-based detection of cancers other than bladder cancer, such as thyroid and breast cancer.” Shares in IIQ are currently trading up 8.59 per cent at 69.5c.

Globe Metals & Mining (ASX:GBE) provided an update on the progress of the finalisation of the Mining Development Agreement (MDA) for the Kanyika Niobium Project. Globe confirms that it has received formal communication from the Malawi Ministry of Mining advising that the negotiations and attendant review of the draft Kanyika Niobium Project MDA have been consummated, following a recommendation for approval made by the Government’s MDA Steering Committee. The letter further states that the Ministry of Justice is vetting the final draft of the MDA, in readiness for submission to the Ministers of Mining and Finance for approval and signing which may take place in due course. GBE shares are currently trading up 15.66 per cent at 9.6c.