ASX News LIVE | ASX to Climb; OPEC+ Extends Oil Cuts, Award Wage Decision Looms

The ASX 200 closed up by +0.77% to 7,761.0 as markets rallied from the recent two-week pullback following a strong day on Wall Street on Friday.

9 of the 11 sectors closed up today, with Financials and Utlilites leading today as the Big Four banks all rose today.

Falling behind today was Information Technology, which fell -0.72% as the Nasdaq continued to show weakness on Friday, as the 6-week tech rally showed its first signs of slowing.

The top performer on the Australian benchmark today was Navigator Global Investments which gained +13.5%, while sharp falls were seen by Rare earths developer WA1 Resources which fell by -14.25% as the latest West Arunta Project results disappointed shareholders.

Western Australian developer Galileo Mining [ASX:GAL] has entered into a joint venture agreement with large-cap ASX miner Mineral Resources [ASX:MIN], involving Galileo’s lithium stake in the multi-metal Norseman project.

As part of the deal, Galileo will sell 30% of its lithium rights at the Norseman project to MinRes for A$7.5 million. Additionally, MinRes has the option to sole fund A$15 million in exploration costs at the site over four years, which would increase its stake in the joint venture to 33%.

The market cheered the move, with Galileo Mining’s stock price surging nearly 17% during today’s trading session, now trading at 28.5 cents per share.

The joint venture arrangement allows Galileo to monetise some of its lithium assets while retaining a significant interest and benefiting from MinRes’s financial capabilities to accelerate exploration and development activities at the promising Norseman project.

Meme stock Gamestop [NYSE:GME] has seen a flurry of activity as original short-squeeze leader, who goes by the Reddit name DeepF——Value reappeared today posting a screenshot of his portfolio position.

The move has ushered in a resurgence of retail speculation in the stock as he showed a screenshot of what appears to be a $115.7 million dollar position in the stock.

Source: Reddit

While this position hasn’t been confirmed, it has been enough to spark another run on the stock, which is up by 19% as amateur retailers hope to cash in on another wave.

We obviously do not recommend trading these meme stocks but highlight it here as an interesting point in market behaviour.

The ASX 200 is up by +0.73% to 7,758.0 at midday as we start June with a positive day, following a rally on Wall Street on Friday.

Much of the gains seen were reversing heavy sell-offs seen in the past two months as May ended as a flat month of trading.

At noon, eight of the eleven sectors are up today, with Energy up by +1.30% as traders expect some movement from oil prices following the extended supply cuts (at this stage, only minor falls in crude prices).

There have been some strong gains by Oil and gas giants Woodside (+1.63%) and Santos (+1.25%) as ANZ released a note highlighting the pressure on Asian power markets as high temperatures weigh on the region.

The other big news this morning was the +3.75% increase in the award and minimum wage, which the Fair Work Commission announced. The changes will come into effect on 1 July and are expected to impact around 25% of Australian workers.

OPEC+ has agreed to extend its deep cuts in oil production, in some cases until the end of 2025, as it battles to shore up prices amid weak global demand and increased supply from non-member countries.

The oil cartel conceded it has no room yet to change its stance on output cuts that began in November 2022, pledging to keep more than 3 million barrels per day of crude off the market until the end of next year.

The group will only bring back a small proportion of its curbed production this year, after eight members like Saudi Arabia and Russia agreed to begin unwinding some ‘voluntary’ cuts from October – a move that could be halted if market conditions deteriorate.

With uncertainty around China’s oil demand and surging U.S. and Canadian production, Opec+ went further than expected to reassure markets it would maintain discipline, even as some members are eager to restart curbed output.

In total, Opec+ is currently withholding almost 6 million barrels per day, about 6% of global supply.

Source: EIA

Despite the cuts, oil prices have been down since the announcements, with Brent crude falling by 0.8% to below US$81 a barrel, while WTI crude is down by 0.27% to US$76.78 per barrel.

The Fair Work Commission has raised the basic award wage and minimum wage by 3.75%.

These changes will come into effect on the 1st of July and are expected to affect approximately a quarter of Australian workers.

The changes were in line with expectations and have been considered by the commission as only having a modest contribution to inflation.

Their statement after the decision today went on to say:

‘The increase of 3.75 per cent which we have determined is broadly in line with forecast wages growth across the economy in 2024 and will make only a modest contribution to the total amount of wages growth in 2024.’

 

‘We consider therefore that this increase is consistent with the forecast return of the inflation rate to below 3 per cent in 2025.’

 

The Australian federal government has directed Yuxiao Fund to divest a significant portion of its shareholding in small-cap rare earths developer Northern Minerals [ASX:NTU].

The decision, taken by the Treasurer on the advice of the Foreign Investment Review Board, requires Yuxiao Fund and four associated Chinese entities to reduce their stake in the mining company.

Northern Minerals operates the Browns Range Project in northern Western Australia. Yuxiao Fund now has 60 days to dispose of 80 million ordinary shares in Northern Minerals, which were acquired in September of the previous year.

With Northern Minerals shares last trading at 3.6 cents apiece, Yuxiao Fund currently holds more than 10 per cent of the company’s outstanding shares, making it the largest shareholder.

In total, the shareholders named in the decision will need to divest over 613 million shares, representing approximately 10.4 percent of Northern Minerals’ issued capital.

Earlier this year, allegations surfaced that Yuxiao Fund had covertly attempted to gain control over the rare earths company. The fund sought to remove Northern Minerals’ executive chairman, Nick Curtis, who subsequently resigned from his role on May 31.

Good morning. Charlie here,

The ASX 200 opened up +0.78% to 7,761.6 as the market followed a positive day on Wall Street last Friday. The US rally looked to be largely driven by late positive trades as the large fund managers repositioned their funds for the end of the month.

The rally wasn’t enough to lift the Nasdaq, which closed flat. Concerns about AI tech growth in medium—to small-sized companies continued after Salesforce’s poor quarterly results on Thursday.

On Sunday, OPEC+ members agreed to extend their deep oil output cuts well into 2025. The move was widely expected and wasn’t enough to overcome concerns of slow demand growth and high interest rates, with oil prices falling.

In Australia, the Fair Work Commission’s award wage decision is due at 10:30 a.m. It is expected to be a smaller raise than before but stay tuned for the final numbers.

The large focus for local markets this week will be the GDP data coming from the National Accounts on Wednesday.

The consensus is for a slim 0.2% GDP growth for the quarter, or 1.2% year-on-year, but the data will also give us more clues about household consumption which could shift market sentiments.

Wall Street: S&P 500 +0.80%, Dow +1.51%, Nasdaq flat.

Overseas: FTSE +0.54%, STOXX flat, Nikkei +1.14%, SSE -0.16%.

The Aussie dollar rose +0.02% to US 66.56 cents.

US 10-year bond yields -5bps to 4.50%.

Australian 10-year bond -5bps to 4.38%.

Gold rose -0.15% to US$2,325.95, while Silver rose +0.40% to US$30.41.

Bitcoin rose +0.1% to US$67,756, while Ethereum fell -0.84% to US$3,781.

Oil Brent fell -0.28% to US$81.63, while WTI Crude fell -0.96% to US$77.16.

Iron ore fell -0.4% to US$115.15 a tonne.