Coal, lithium miners extend rally, Healius hit hard, CapVest drops Virtus deal: ASX up 0.7% at noon

The Australian sharemarket jumped at the open, recovering all of yesterday’s losses in a broad-based rally. If the momentum continues, the ASX 200 is on track to extend its winning streak to a third straight week.

Stocks climbed as US futures edged higher after Wall St snapped a two-day fall ahead of the key jobs report. Investors are weighing up how global central banks are going to combat multi-year high inflation and economic growth. Markets in Hong Kong and China are shut, so all eyes in the Asia Pacific region are on the ASX.

At noon, the S&P/ASX 200 is 0.7 per cent or 53 points higher at 7,229. The SPI futures are pointing to a rise of 57 points.

Information tech and materials are powering the market, with each up by 2.4 per cent, followed by energy which has added 0.5 per cent. Utilities have retreated 0.6 per cent, with communication services up 0.5 per cent. Financials are trading flat.

Champion Iron (ASX:CIA) is the best performer to this point, up 6.5 per cent to $7.73, followed by Liontown Resources (ASX:LTR), and De Grey Mining (ASX:DEG).

Healius (ASX:HLS) is the worst performer, down 6.5 per cent to $3.89 after reporting “difficult market conditions” in the second half of the financial year despite strong trading in the first half. In response to ongoing market volatility and the range of broker forecasts, Healius said its underlying EBIT thru May 2022 is in the order of $473 million, representing an increase of more than 100 per cent on the unaudited EBIT of $234 million for the same period in FY21.

Ansell (ASX:ANN) is the second-worst performer after Credit Suisse downgraded its rating to neutral and reduced its target price to $24 from $25, with the broker seeing rising material prices as a headwind for the company. With raw materials accounting for around 55 per cent of Ansell’s cost of goods sold, the broker lowered its earnings by 5 per cent through to financial year 2024. Shares are trading 3.5 per cent lower to $25.96.

Coal India, the world’s largest coal miner by output, will next week issue short- and medium-term tenders to import coal for utilities as shortages raise concerns about renewed power outages, Aussie coal miners continue to rally. Whitehaven Coal (ASX:WHC) is up 2.1 per cent to $5.35, New Hope (ASX:NHC) rose 2.9 per cent to $3.92 while Terracom (ASX:TER) is trading 5.6 per cent higher to 85 cents.

Infant milk formula companies are mixed. Bubs Australia (ASX:BUB) is up 1.6 per cent to 63 cents while A2 Milk (ASX:A2M) is down 0.4 per cent to $4.70.

Lithium stocks extended their rebound. Liontown Resources (ASX:LTR) gained 4.6 per cent to $1.24, Mineral Resources (ASX:MIN) surged 4.7 per cent to $60.31 while Lake Resources (ASX:LKE) soared 9.1 per cent to $1.44.

Banks are mixed, with Westpac (ASX:WBC) up 0.3 per cent to $23.99 while Commonwealth Bank (ASX:CBA) is down 0.2 per cent to $105.23.

All iron ore miners have advanced with BHP (ASX:BHP) gaining 2.1 per cent and Fortescue Metals (ASX:FMG) up more than 3 per cent to $21.23.

Gold miners are firmer, with Evolution Mining (ASX:EVN) adding 3.1 per cent, Northern Star (ASX:NST) up 2.5 per cent to $8.89 and Newcrest Mining (ASX:NCM) trading 1.7 per cent higher at $24.71.

CSL (ASX:CSL) is up 0.8 per cent to $270.63, Telstra (ASX:TLS) has fallen 1.3 per cent to $3.91. Block (ASX:SQ2) has improved 4.3 per cent to $119.50, Woodside Energy (ASX:WDS) is down 0.06 per cent at $31.73, while Zip Co (ASX:Z1P) is trading 0.6 per cent higher at $0.80.

Local economic news

The value of new housing loan commitments fell a seasonally-adjusted 6.4 per cent to $31.0 billion in April following a rise of 2.1 per cent in the previous month, according to the Australian Bureau of Statistics.

Company news

PeopleIn (ASX:PPE) has entered into an agreement to buy FIP Group Holdings. The company is a workforce solutions business that is one of the largest providers of staff to the food sector in Australia. Shares are trading 8.2 per cent higher to $3.45.

Incannex Healthcare (ASX:IHL) has announced positive results from its phase 2 clinical trial, investigating treatment for patients with obstructive sleep apnoea. The pharmaceutical company said the treatment (IHL-42X) improved patient reported sleep quality, and was well tolerated. Shares are trading 9.3 per cent higher at 41 cents.

FireFinch (ASX:FFX) is on track with its demerger as Leo Lithium prepares to debut on the ASX. This comes after the company raised $100 million for Leo Lithium, in which Firefinch has a $20 million stake. All conditions for the demerger have been approved, with eligible Firefinch shareholders to receive one Leo Lithium share for every 1.4 FireFinch shares on June 6. Shares are trading ex the pro-rata in-specie distribution and down 61.6 per cent to $0.36 as a result.

Austco Healthcare (ASX:AHC) announced the appointment of Andrew Hall to the newly created role of chief commercial officer Australia to start in July. Shares last traded at 9.6 cents.

CapVest withdrew its takeover bid for Virtus Health (ASX:VRT) since BGH Capital first increased its takeover offer, becoming the preferred bidder. Shares are trading 0.1 per cent higher to $8.15.

Fintech company 8common (ASX:8CO) said increased travel and activity levels are anticipated to deliver record SaaS revenue in the fourth quarter of financial year 2022 of $820,000 to $830,000. Shares are trading over 14 per cent higher at 10 cents.

Commodities and the dollar

Gold is trading at US$1872.49 an ounce.
Iron ore is 5.2 per cent higher at US$143.65 a ton.
Iron ore futures are pointing to a rise of 3.77 per cent.
One Australian dollar is buying 72.62 US cents.