Tech losses outweigh gains in the energy sector: ASX drops 0.6%

The ASX closed lower in Tuesday trading trading following a slide on Wall Street overnight. The local market was volatile as declines in healthcare, technology, resources and financial stocks offset gains in the energy sector.

Australian coal stock favourites Whitehaven Coal (ASX:WHC) and New hope Corporation (ASX:NHC) traded at near 10-year highs today. It followed yesterday’s release from Whitehaven noting the company expects to report 43 billion in earnings for financial year 2022.

Meanwhile, expectations China could soon lift its unofficial ban on Australian coal are seemingly growing. Yancoal (ASX:YAL) and TerraCom Resources (ASX:TER) both closed the day higher , closing up 0.85 per cent and 2.63 per cent respectively.

Lake Resources (ASX:LKE) was the best-performing stock today on the ASX 200, closing up 13.6 per cent to 71 cents. Recent short interest in Lake has grown to over 150 million shares in the last month, making it the sixth most-shorted stock on the ASX. It was followed by shares in Pendal Group (ASX:PDL) and Whitehaven Coal (ASX:WHC).

The worst-performing stock in the S&P/ASX 200 was Xero (ASX:XRO), closing 6.02 per cent lower at $82.73. It was followed by shares in PointsBet Holdings (ASX:PBH) and EML Payments (ASX:EML).

At the closing bell, the S&P/ASX 200 was 0.56 per cent or 37.50 points lower at 6649.60.

Asian equities also trading mostly lower Tuesday. Japan’s market finishing higher but off its peaks as it makes up ground on yesterday’s holiday. Tech shares were also weighing on Hong Kong and Shanghai following Apple’s announcement that it will slow hiring. South Korea and Taiwan were lower. Southeast Asia mostly down, but India opening brightly.

Treasury yields were mixed, with crude oil blends flat. Precious metals were also flat, with gold flirting with $1,700 again. Other commodities were lower.

The Australian dollar rose after the release of the minutes from the Reserve Bank’s board meeting earlier this month, where it raised interest rates by 0.5 percentage points to 1.35 per cent. In the minutes, the central bank said more interest rate rises were needed to contain inflation. Citi Australia chief economist Josh Williamson said: “a tick of approval for the household balance sheet implies that the RBA will focus squarely on inflation in the near-term.” While noting that the RBA Board’s discussion around the neutral rate stopped short of the RBA suggesting that it would need to take the cash rate above neutral, he says this is “inevitable, wherever neutral may be.” “We see risks of a more hawkish RBA in the near-term, a view that’s driven by the upside risks to the near-term inflation outlook,” Mr Williamson says. He sees upside risk to his year-end cash rate forecast of 2.6 per cent.

Australian prime mortgage arrears hits post-financial crisis low in the first quarter of 2022, in a sign that households are well placed to deal with rising interest rates. A new report by S&P shows that while arrears will increase in the coming months as monetary policy tightens, it will be doing so from historically low levels. Prime mortgages fell to a post-financial crisis record of 0.73 per cent in March from 0.94 per cent the same month a year earlier. Across the Australian RMBS sector, S&P says most borrowers should be well placed to manage this transition, given the buildup in repayment buffers, equity build up in home loans, and the inclusion of interest-rate buffers in debt-serviceability assessments.

“Some borrowers will struggle with the combined effect of higher mortgage repayments and inflationary pressures. This is likely to push up arrears in early arrears categories in the second half of 2022 as borrowers work to reprioritize spending commitments to absorb higher, nondiscretionary expenses,” S&P says.

Company news

TNG (ASX:TNG) announced this morning that it has achieved further significant milestones in its funding strategy for the 100 per cent owned Mount Peak vanadium-titanium iron project in the NT following the receipt of letters of interest from Euler Hermes and seven lenders active in mining and metals and eco finance. TNG CEO Paul Burton commented, “This marks another significant and exciting milestone in our multi-source funding strategy for Mount Peak. The receipt of a letter of interest for A$300 million in funding from Euler Hermes represents a significant achievement for TNG and represents the culmination of many years of hard work at TNG”. Shares in TNG closed 14.71 per cent higher at 78c.

Mesoblast (ASX:MSB) announced this morning that results from three randomised controlled trials in class II/III HFrEF and in end-stage HFrEF with left ventricular assist devices (LVADs) support the idea of a common mechanism of action by which rexle mest rocel-L reverses inflammation-related endothelial dysfunction and reduces adverse clinical outcomes across the spectrum of HFrEF patients .” Shares in MSB closed 7.6 per cent per cent higher at 92c.

Shares in investment platform HUB24 (ASX:HUB) closed down 4.97 per cent per cent on Tuesday despite announcing record quarterly net inflows of $11.7 billion, up 38 per cent on the same time last year. The total number of advisers using the platform is now 3486, up 13.8 per cent on the previous period, but relatively stable on the previous two quarters. Some traders believe falls could stem from an overall weakness in growth stocks, but also a slowdown in advisers could signal a slowdown in flows in the coming quarters.

Vintage Energy Ltd (ASX:VEN) and its JV partners Bridgeport and Metgasco announced commencement of a work program to bring the Odin gas discovery to market at the earliest opportunity. The JV has agreed to commence Concept Engineering for connection of the Odin gas field to the Vali-Beckler pipeline, as well as preparation of a commercial plan for marketing of the field’s gas. It is anticipated these initiatives, followed by the securing of a Gas Sales Agreement, could see field work begin in the second half of FY23 (subject to JV and regulatory approvals) and gas sales from Odin commence in the first half of FY24. VEN closed 2.47 per cent per cent higher at 8.3c

JB Hi-Fi (ASX:JBH) posted record sales and earnings for fiscal 2022, with online revenue jumping more than 50 per cent, as shoppers returned to stores as COVID-19 restrictions eased. Group revenue rose 3.5 per cent to $9.3 billion from a year ago, supported by strong same store sales growth of 10.9 per cent in its Australian business in the last quarter of the year. Shares in JBH closed 2.15 per cent per cent higher at $41.76.

Production volumes at BHP’s (ASX:BHP) flagship Australian iron ore and coking coal divisions will be soft over the next 12 months after pandemic and weather-related disruptions hit volume growth. BHP told investors it would sell between 278 million and 290 million tonnes of iron ore this year, with the midpoint in line with export volumes achieved in the last three years. BHP shipped 283.94 million tonnes over the past 12 months, little changed from the 283.87 million tonnes in the year to June 2021 and the 283.25 million tonnes shipped the previous year. Shares in BHP closed down .97 per cent at $36.61.

Suncorp (ASX:SUN) dropped after ANZ deal wiping out nearly all gains made on Monday after reaching a deal to sell its banking unit to ANZ. Shares in the Queensland financial services firm closed 5.01 per cent per cent lower to $11.19. On Monday shares had jumped 6.1 per cent to $11.78 on ANZ’s planned takeover. The deal, which is the largest banking buy-up in over a decade faces a number of hurdles before getting the greenlight including approval by the ACCC, the Queensland government and Federal Treasurer Jim Chalmers.

Commodities and the dollar

Gold is trading at US$1709.68 an ounce.
Light crude is trading $0.57 higher at US$99.43 a barrel.
One Australian dollar is buying 68.51 US cents.
Iron ore is 4.5 per cent higher at US$100.90 a tonne.
Iron ore futures are pointing to a fall of 1 per cent.

Futures

The Dow Jones futures are pointing to a rise of 36 points.
The S&P 500 futures are pointing to a rise of 9 points.
The Nasdaq futures are pointing to a rise of 25 points.
The SPI futures are pointing to a fall of 42 points when the market next opens.