ASX News LIVE | ASX Rises in First Day of Trading for 2024, Geopolitics hang over early year predictions

The ASX 200 closed up +0.49% at 7,627.8 points, just off an all-time high. Markets defied expectations and futures pointing to a weak day to finish strong on the back of rising Energy stocks.

Iran’s movement of military vessels into the Red Sea pushed up oil prices through trading, with WTI Crude up 1.53% to US$72.78 per barrel.

The Energy sector gained 1.5%, while Real Estate lost 0.66%.

On the ASX 200, the biggest gainer was Boss Energy, up 6.20%, followed by Yancoal Australia, up 4.44%.

The biggest fallers today were Bapcor -2.89% and Genesis Minerals -2.79%.

BHP +0.42%, Rio Tinto +0.84%, Santos +1.05%, Woodside Energy +1.22%, Whitehaven Coal +4.03%.

Pan Asia Metals [ASX:PAN] has seen its stock surge by 24% today after it announced multiple option agreements to begin drilling on areas at its Pink Project in Chile.

The aim of the drilling program is to find lithium-bearing aquifers in hopes of building a lithium brine operation in the area.

The company said it is in discussions with geophysics and drilling service providers and plans to begin drilling in early 2024.

Source: PAM

The Australian Productivity Commission just released its quarterly bulletin.

The most noticeable inclusion was this graph, which showed that the ‘Productivity bubble’ associated with the pandemic has now passed.

As Editor Kiryll has pointed out many times here, these productivity numbers are significant for our next fight versus the more entrenched inflation.

If wage growth overtakes productivity significantly, we can fall into a trap of worsening economic conditions.

Here’s more from IFM Economist Alex Joiner

The @ozprodcom quarterly bulletin notes that the "productivity bubble" associated with the pandemic has passed. There's no excuses from here, nor for the stagnation of productivity from 2016-2019. Important for the monetary policy/inflation outlook as much as anything. pic.twitter.com/vdrUWVKcAW

— Alex Joiner 🇦🇺 (@IFM_Economist) January 1, 2024

The ASX 200 moved off its flat opening to sit up 0.5% at 7,627.8, near a record high.

Energy stocks helped lift the market while gold miners faced sell-offs.

Gold miner Emerald Resources is the biggest loser at midday, down -3.49%, despite gold continuing to inch higher, up +0.32% to US$2,069.47 per ounce.

Meanwhile, Santos is up +0.86% to $7.67, and Woodside is up +1.16% to $31.42 per share.

At the top of the list of many trader’s concerns for 2024 is geopolitical risk.

Putin said yesterday that he didn’t want to fight in Ukraine ‘endlessly‘ but reaffirmed that peace would come ‘only on our terms‘.

Russia currently occupies around a fifth of Ukraine and has said it is ‘gradually defeating‘ Ukraine as EU and US aid begins to fall.

The battle over Gaza continues, with Israel saying it’s not done despite thousands of Israeli soldiers being shifted out of the Northern Gaza Strip.

Fighting continues in the south as signs point to a protracted conflict as Israel attempts to unseat Hamas from the region, something that analysts predict is unlikely.

‘The objectives of the war require prolonged fighting, and we are preparing accordingly,’ Rear Adm. Daniel Hagari of the Israeli Forces said.

As a response to the war in Gaza, Houthi Militants continue their pressure on the Red Sea, sending boat and drone attacks on vessels they claim are related to Israel.

These attacks are supported by Iran, which supplies the drones and equipment to the Shia-aligned Houthi forces.

Below, we can see the impact of those attacks as hundreds of ships take the long route around Africa to avoid risks in the Red Sea.

Prior to this, approximately 12% of all trade went through the Suez Canal and the Red Sea.

These disruptions could boil into something bigger as the US sends a military task force to secure the region, while Iran responded today with the launch of its own military vessels into the region.

How the world changed in 10 days

A time-lapse visualizing the Houthi blockade at Red Sea chokepoint. pic.twitter.com/D3E582scEf

— Propaganda and co (@propandco) January 1, 2024

Car retailer Eagers Automotive [ASX:APE] has seen its shares rise by 1% in early trading as the company gave an update on the cyber incident it faced at the end of the year.

In its announcement today, APE said it was able to isolate the penetration quickly to avoid further disruption and that the incident would not ‘materially impact’ FY23 results.

The disruption from the incident was mainly within transaction finalisation, and most dealerships were able to remain open.

The company has notified NZ and AU Cyber Security Centres and has begun an investigation into the breach.

For customers, some relief was felt as the company said only a small number of customers were affected:

‘Based on investigations to-date, the company is in the process of notifying a small number of individuals identified who many face risk of data misuse.’

ASX 200 opened flat momentum slips, and many markets remained closed yesterday to give investors a sense of direction for the new year.

A big part of that will rely on signals from the Reserve Bank for the timing of future interest rate cuts.

The latest AFR survey shows most economists expecting rate cuts to start in September this year, meaning rates would remain at the 12-year high of 4.35 for the bulk of the year.

This is certainly supported by the rhetoric from RBA Governor Michelle Bullock, who has widely said that the battle against inflation is far from over.

Meanwhile, the market has fully priced in two cash rate cuts this year, the first one being in June.

Katana Asset Management portfolio manager Romano Sala told the AFR:

‘There is an enormous amount of cash on the sidelines, an enormous amount of cash in the bond funds at the moment,’ he said.

 

‘What we’re going to see as interest rates start to roll over is for some money start to trickle back into equities and that’ll accelerate as rates lower.’

 

Good morning. Charlie here. Happy new Year!

The ASX 200 Futures -0.21% to 7,567.5 points to an opening drop on the ASX 200 as investors see the global end-of-year rally slow.

The ASX 200 finished 2023 up 7.8%, its best return in two years. The ASX 200 is now in an overbought position and will look to international markets to determine its next moves.

Gold also starts the year strong, sitting above US$2,000 and with its sights set on record highs this year.

Oil prices are likely to remain volatile in the new year trading as tensions in the Red Sea continue to ramp up, sending prices up, while global demand and oversupply concerns push it down.

Oil closed 2023 down -10%, its first annual loss since 2020.

Iran has now dispatched a warship into the Red Sea after the US Navy intercepted and destroyed three Houthi boats.

Currently, hundreds of ships are taking the long route around Africa as a result of Houthi Militants’ drone attacks on commercial ships in the region.

Wall Street: Dow flat, Nasdaq -0.56%, S&P 500 -0.28%.

Overseas: FTSE +0.14%, STOXX +0.16%, Nikkei -0.22%, SSE +0.68%

The Aussie dollar rose +0.02% to US 68.12 cents.

US 10-year bond yields at 3.88%. Australian 10-year bond yields +1bps to 3.97%.

Gold rose +0.16% to US$2,066.26. Silver flat at US$23.79.

Bitcoin rose +2.31% to US$43,509, and Ethereum rose 1.79% to US$2,331.

Oil Brent fell -0.05% to US$77.08, while WTI Crude fell -0.63% to US$71.32.

Iron ore rose +0.15% at US$136.37 a tonne.