FIVE to FIVE AU: Another La Nina could harm the construction sector; The star rises on bad news; Seven comes across some good news; is there an upcoming bear market for crypto?
There were no headwinds for the ASX today, despite evidence that another La Nina event is on the way and could affect the construction industry and its insurers.
“Primary atmospheric and oceanic indicators of the El Niño-Southern Oscillation (ENSO) show an established La Niña,” the Bureau of Meteorology (BoM) said in an update.
“Models indicate that this La Niña event could peak in the spring and return to neutral conditions in early 2023.”
This is bad news, especially for communities that are still reeling from the latest extreme weather events.
The good news is the ASX’s current performance despite a host of factors that could (and have) dragged it down.
The S&P/ASX200 gained 49.20 points or 0.71% to 7,013.70, topping its 20-day moving average. Over the past five days, the index has gained 2.74%, but is down 5.79% for the past year to date.
The best performing stocks were Chalice Mining Ltd (ASX:CHN, OTCQB:CGMLF) up 9.33% and Novonix Ltd (ASX:NVX) up 7.08%.
Shares of lithium also helped the ASX rise after broker upgrades and strong demand.
Pilbara Minerals rose 3.61% to $4.79, bringing total gains for the calendar year to just over 35%. Core Lithium Ltd (ASX:CXO) rose 4.09%, Allkem gained 2.58% and Liontown Resources (ASX:LTR) rose 1.14%.
The price of the commodity last traded at 497,500 yuan ($104,643).
Among the sectors, Energy increased by 1.11%, Consumer Discretionary increased by 1.23%, Financials increased by 1.01%, Utilities increased by 1.15% and real estate gained 1.60%. The only sector in the red is healthcare which fell 0.77%.
The future is so bright
The outlook for the S&P/ASX200 is solid. CommSec estimates that the benchmark S&P/ASX 200 could be trading in the range of 7,100 to 7,400 points by the June quarter of 2023, or 10% on the year.
That said, inflation, interest rates and the cost of living will continue to have an effect.
“Research analysts expect weaker earnings growth this fiscal year and next as the economy slows. Corporate profit margins are likely to be squeezed by higher costs, destocking and discounts due to high inventory levels as supply chain disruptions ease,” Commsec chief analyst Craig James said.
“For investors, it will simply be a question of analyzing which companies best meet the challenges,” he specifies.
Bad news, good result
The Star Entertainment Group, which jumped more than 4% after emerging from a trading halt, also helped the ASX rise.
Surprisingly, shares rebounded after the NSW casino regulator issued Star a ‘show cause notice’ following Bell’s report finding it unfit to operate a casino license in NSW.
NSW Independent Casino Commission chief commissioner Philip Crawford said the commission was now assessing what type of action to take against Star, including tearing up its licence.
Crawford said the group was guilty of “institutional arrogance”.
The company has 14 days to respond before disciplinary action is taken.
Star says it “intends to respond to the notice within 14 days.”
“The Star is currently reviewing the report and the issues raised in the notice,” the company said.
Investigation chief Adam Bell said SC’s review found widespread misconduct and blamed Star executives for the group’s misbehavior, some of whom had already left the building.
“There have been people withdrawn from the company. It’s not about firing a number of CEOs and saying everything is fine,” Bell said.
Another investigation is now required to separately examine Star executives.
“Police are investigating a range of issues relating to individuals, in terms of breaches of the Casino Control Act,” he said.
The investigation lasted four months, but it is unlikely that she was stripped of her license. Instead, it will have to strengthen self-declaration requirements while in-house lawyers undergo “independent and specific training on legal privilege and when it can and cannot be claimed”.
Training on conflicts of interest and responsible gambling should also be on the agenda, while a no-money policy in the casino should be introduced.
Bell recommended the watchdog take action on breaches of anti-money laundering protections in VIP rooms and cash registers connected to Suncity.
Of management, Bell said: “A number of extremely serious governance, risk management and culture failures of The Star entities occurred during the reporting period, and even prior to the start of of it.
“Management has repeatedly chosen to take risks rather than avoid or contain them. Too often the question that was asked was “how can we do this?” rather than “should we do this?”.
And that’s what gives you a 4% raise.
Good news, bad result
In contrast, Seven West Media Ltd (ASX:SWM) fell 2%… after good news.
The Seven Network has signed a deal to broadcast the TV Week Logie Awards from 2023.
Investors weren’t happy, which is surprising because it would bring in ratings and advertising dollars.
It might even make the awards show more relevant to Australian TV fans.
Or not…maybe that’s why his shares fell.
“The TV Week Logie Awards are more than the night of TV nights, they are a treasured Australian institution and a celebration of Australia’s love of television,” said Seven West Managing Director and Chief Executive. Media, James Warburton, in a published statement.
“It’s just the beginning, but we have big, exciting plans for the awards in 2023 and beyond.”
It hasn’t been a good year for Seven West which is down 23.5% for the calendar year.
Crypto Markets Rally as The Merge Looms
The upcoming Ethereum merger has seen crypto assets surge. Simon Peters of eToro said, “Cryptoasset markets staged a rally last week as we enter the final 72 hours before the Ethereum network meltdown. The event is all in the industry’s minds as investors and users wait to see its impact on the market.
“Ether, the token associated with the Ethereum blockchain, was up around 10% for the week last week, despite Wednesday’s dips. The token started the week trading around US$1,560 before from falling below US$1,500 mid-week, from then on it rallied to now trade just below US$1,720.
“Meanwhile, bitcoin has also seen its price surge. After starting the week just below US$20,000, it fell below US$18,500 before climbing back up to now trade around US$21,600, a roughly 8% seven-day increase. Talk has abounded of a so-called “short squeeze” in bitcoin with bullish investors piling in to tackle short sellers.”
This week, a series of economic data could move prices, with US inflation indicators the most likely to change the dial.
Meanwhile, Peters said there was growing evidence of a bear market for crypto.
“As the market faces troubled times, examples of institutional ‘bearish construction’ – where major players take stakes in assets at favorable prices – are on the rise.
“One of the most influential players in the space, Michael Saylor’s Microstrategy, has announced plans to sell $500 million worth of stock to fund more crypto-asset acquisitions. a fairly common decision in such market conditions to provide liquidity to buy assets considered undervalued – something Saylor is clearly thinking with his bitcoin strategy.
“Elsewhere, a State Street executive, Irfan Ahmad, commented with an Australian outlet, Sydney Morning Herald, saying that despite the volatility, the firm’s customers were still buying into the space. With such a range of projects and growing sophistication in the sector, Ahmad says the company’s clients have pragmatically asked how they can gain better access to the sector.
five to five
International Graphite highlights Springdale’s potential with the discovery of a new high-grade shallow graphite prospect
“These exploration results are exceptional and confirm the use of electromagnetic geophysical survey data to highlight the substantial potential for graphite mineralization at our Springdale claims and the potential for significant resource growth at the project,” said the Executive Chairman of International Graphite Ltd (ASX: IG6), Phil Hearse. said.
Magnetite Mines (ASX:MGT) plans to more than double iron ore production at Razorback to meet growing demand
“By raising its targets, the company is responding to direct evidence of rapidly changing market conditions associated with the decarbonisation demands of the steel industry,” said Tim Dobson, new Managing Director of Magnetite Mines (ASX:MGT) Ltd. .
Critical Resources Posts Best Results Ever from Mavis Lake Lithium Project in Canada
Critical Resources Ltd (ASX:CRR) has received the highest quality lithium results to date from the Mavis Lake project in Ontario, Canada, with assays up to 4.32% lithium oxide.
GTI Energy Mobilizes Rigs for ISR Uranium Project in Wyoming for 100,000 Foot Drill Program
“Drilling is being sequenced across all five project areas to deliver the full 100,000ft program before Christmas,” said Bruce Lane, chief executive of GTI Energy Ltd (ASX:GTR).
Magmatic Resources returns the best dosages of Myall; extended diamond drilling
“To be able to report such exceptional results in our first completed hole of the program is nothing short of remarkable, and it has already gone a long way to demonstrating the size and quality potential of the system,” Magmatic Resources Ltd (ASX:MAG) said. Managing Director Dr. Adam McKinnon.
On your six
Johnson & Johnson (NYSE:JNJ) Reaches $205 Million Settlement in Australian Pelvic Mesh Class Action
The settlement, which Shine Lawyers said was the largest product liability class action settlement in Australian history, follows multiple legal proceedings involving more than 11,000 claimants, the pharmaceutical giant and its Ethicon subsidiary.
The one to watch
Cedar Woods Properties with Proactive at the ASX Small and Mid-Cap Conference
Nathan Blackburne, Managing Director of Cedar Woods Properties Ltd (ASX:CWP), speaks with Proactive at the ASX Small and Mid-Cap conference in September 2022.
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