Wall Street rally drives ASX higher, led by tech and financials: Aus shares up 1.7% at noon

Australian shares shot up 1.66 per cent in morning trading, hitting a fresh three-week high, led by tech and financials. This followed a rally in US stocks overnight, driven by upbeat earnings reports that eased concerns over an imminent slowdown.

At noon, the S&P/ASX 200 is 1.66 per cent or 110.70 points higher at 6760.30.

Lithium stocks continue to outperform today as the demand/supply dynamic continues to play out despite volatile equity markets. Data from the Shanghai Metals Market showed that demand for battery-grade lithium carbonate increased during July as downstream battery factories and auto manufacturers increased their operating rates. At the same time, battery producers reported lower inventory readings as raw material purchases were not able to keep up with battery output.

Best and worst performers

The best-performing sector is Information Technology, up 4.16 per cent. The sector with the fewest gains is Consumer Staples, up 0.07 per cent.

The best-performing stock in the S&P/ASX 200 is Megaport (ASX:MP1), trading 20.71 per cent higher at $7.81. It is followed by shares in Brainchip (ASX:BRN) and Liontown Resources (ASX:LTR).

The worst-performing stock in the S&P/ASX 200 is Pendal Group (ASX:PDL), trading 3.27 per cent lower at $4.29. It is followed by shares in Perseus Mining (ASX:PRU) and Downer EDI (ASX:DOW).

US markets

Overnight US equities were sharply higher in Tuesday trading, ending near session high, as traders bet on strong corporate earnings reports and wagered that markets have found a bottom.

The Dow Jones Industrial Average jumped 754.44 points, or 2.43 per cent, to 31,827.05 — closing near the highs of the session as gains accelerated in the final hour of trading. The S&P 500 gained 2.76 per cent to 3,936.69. The Nasdaq Composite rose 3.11 per cent to 11,713.15.

All three major averages are above their 50-day moving averages for the first time since April. The broader market index has gained almost 7.4 per cent off its June 16 closing low.

Asian markets

Asian equities strengthened Wednesday. The Nikkei, ASX and Kospi rose more than 1 per cent as S&P 500 futures extended gains following Tuesday’s big rally.

Bond markets are under more pressure, with Treasury, Aussie and New Zealand curves flattening.

Commodities and currencies

The Euro and the sterling are building on overnight gains after the dollar index fell to a two-week low.

Commodities mixed with base metals advanced, but WTI was lower following a larger-than-expected API inventory build.

Gold is trading at US$1711.27 an ounce.
Iron ore is 4.4 per cent lower at US$96.45 a tonne.
Iron ore futures are pointing to a fall of 0.2 per cent.
One Australian dollar is buying 68.97 US cents.

Economic news

There is more scrutiny on China tech after the Wall Street Journal reported Beijing preparing to fine Didi $1B to end an investigation over data security breaches. The Chinese Covid situation remains volatile after daily infections hit their highest level since late May. Traders also weighed the potential for policy support, including additional steps to alleviate pressure on property developers. China is expected to keep benchmark rates unchanged today, though there is some speculation of a reduction in 5Y LPR.

There is nothing particularly incremental from RBA Governor Lowe, who noted higher rates will help moderate demand growth amid capacity pressures. His speech follows hawkish takeaways from the July RBA minutes, which noted cash rate is well below the lower range of neutral rate estimates. Market forecasts for terminal cash rate were dialled up following the minutes, while futures are pricing in consecutive 50 bp rate hikes in August and September.

Company news

Euro Manganese (ASX:EMN) announced early today that it has become a member of the Global Battery Alliance (GBA), a partnership of leading organisations from across the battery value chain, which includes governments, academics, and NGOs who have mobilised to ensure that battery production not only supports green energy, but also safeguards human rights and promotes environmental sustainability. EMN is the first high-purity manganese company to join the GBA. Shares in EMN are currently trading 6.96 per cent higher at 31c.

Silex Systems (ASX:SLX) announced the completion of the construction of a pilot demonstration facility, which is being deployed to verify commercial production capability for high-purity “Zero-Spin Silicon”, a key enabling material for the emerging silicon quantum computing industry. The construction of the pilot demonstration facility is the seventh milestone in the ZS-Si Project that is being undertaken in conjunction with project partners Silicon Quantum Computing Pty Ltd (SQC) and UNSW Sydney (UNSW). As part of this milestone, a pilot-scale process reactor and associated gas handling system were constructed. Shares in SLX are currently trading up 7.53 per cent at $3.215.

Centaurus Metals (ASX:CTM) reported outstanding new drill results from ongoing resource growth and development drilling at its 100 per cent-owned Jaguar Nickel Sulphide Project in the Carajás Mineral Province of northern Brazil. The results are expected to contribute to an increase in the global Mineral Resource Estimate (MRE), due for delivery at the end of September, as well as to upgrade more of the Jaguar MRE into the higher-confidence measured and indicated categories in advance of ore reserve estimation as part of the DFS. Shares in CTM are currently trading up 5.73 per cent at 1.015.

Smartpay (ASX:SMP) released a strong trading update following the completion of the first quarter to 30 June 2022 of the 2023 financial year. Increasing their investment in marketing and sales paid off and resulted in record months for lead generation and has delivered accelerated customer acquisition in the first 1/4 of FY23 with over 1200 new transacting terminals added to the end of June. Shares in Smartpay are currently trading up 16.67 per cent at 66.5c.

Lithium producer Allkem (ASX:AKE) says it earned record revenue of $US337 million in the June quarter on a gross operating cash margin of 67 per cent. It achieved an average lithium price of $US41,033 a tonne free on board (FOB) during the June quarter. Its Mt Cattlin mine in Western Australia produced a record 193,663 dry metric tonnes of spodumene concentrate in FY 2022, while the Olaroz lithium brine facility in Argentina produced 12,863 tonnes of lithium carbonate in FY 2022. Shares in Allkem are currently trading up 0.31 per cent at $9.83.

Telco infrastructure firm Megaport (ASX:MP1) has reported fourth quarter revenue of $30.6 million, a 10 per cent improvement on Q3. The company also reported normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of $1 million in Q4 for the first time, thanks to two new markets, Canada and Japan, becoming profitable and ahead of schedule. That’s after backing out of equity-settled employee-related costs, foreign exchange gains and losses on disposal of property, plant and equipment, and other non-recurring expenses, it said. Normalised EBITDA for the year to date is -$10.2 million. Shares in Megaport are currently trading up 19.32 per cent at $7.72.

Fintech and lender Plenti Group’s (ASX:PLT) shares are up nearly 4 per cent to 66c in morning trading as it posted a 90 per cent jump in its loan portfolio to $1.44bn at June 30 compared to the prior corresponding period. The portfolio grew 11 per cent on the prior quarter. It posted strong quarterly loan originations of $289m, up 34 per cent on the prior period. Quarterly revenue totalled $30.5m. Shares in PLT are currently trading up 5.56 per cent at 66c.