ASX News LIVE | XJO continues downward streak with Wall St, China plays give and take with trade policy

Here’s a great old video giving some perspective on the change we see all around us these days.

A farmer born in 1842 talks about life and change. (Filmed in 1929) pic.twitter.com/r4gLRB7CLg

— Historic Vids (@historyinmemes) October 22, 2023

Australian shares hit the lowest in a year today, mirroring Wall Street as concerns about the Middle East conflict spreading pushed down sentiment.

The ASX 200 lost 56.6 points, or -0.82%, to 6,844, extending last week’s decline in response to the Israel-Hamas and concerns around interest rates rising again here and in the U.S.

Seven out of the eleven sectors were in the red, with materials and energy the worst performers. The major banks retreated between -0.2–0.8%.

Rio Tinto fell -2.74%, and BHP Group declined -2.7%. Fortescue Metals fell -2.6%. Santos lost -2.4%, and Woodside was down -3.5%.

Coal stocks were heavily down today, with New Hope the worst ASX 200 performer, down -8.73% as it traded ex-dividend.

South 32 dropped 3.4% after flagging a 33% drop in coal production this quarter in its update.

Investors await Wednesday’s September CPI data that could support the case for further monetary tightening. The RBA rate tracker has the odd of a rate increase at 21%.

Shares of Australian healthcare informatics company Pro Medicus [ASX: PME] bounced 1.9% today after the company announced a $16 million contract with US-based South Shore Health to provide imaging services.

The contract is for the supply and implementation of Pro Medicus’ Visage 7 enterprise imaging platform across South Shore Health’s network of hospitals and clinics. Visage 7 is a cloud-based platform that provides clinicians with access to diagnostic images from anywhere.

‘South Shore Health adds to our rapidly growing footprint in the North American IDN space and serves to further illustrate the suitability of our platform across a very broad range of healthcare enterprises.’ said ProMedicus CEO Dr Sam Hupert.

‘Key to this is the fact our offering is “auto-scaling”. We have one application; it is transaction-based and in the cloud, so clients only pay for what they use regardless of their size.’

The contract is expected to generate revenue for Pro Medicus over the next eight years.

South Shore Health is a non-profit health system that provides care to over 3 million patients each year. The system operates four hospitals, 21 health centres, and a variety of other healthcare facilities.

Economic experts in the United States are expressing increased confidence in the country’s economic growth trajectory up until early 2024, with reduced chances of a recession as consumer spending remains robust.

In the third quarter, the American economy likely expanded at an annualised rate of 3.5%, marking its fastest growth in almost two years.

This acceleration can be attributed to higher household spending, prompting forecasters to revise their estimates upwards. Despite expectations of a slowdown in growth over the subsequent two quarters, economists surveyed by Bloomberg have raised their projections for the country’s Gross Domestic Product (GDP).

The labour market remains strong, which has been a key factor in sustaining consumer spending. Despite challenges posed by elevated borrowing costs and inflation, household expenditure is being bolstered by a resilient job market. Projections for employment over the next year have been revised upwards, contributing to the optimistic sentiment. As a result, economists now view the likelihood of a recession in the next year as even.

For the global economy, Bloomberg has pointed to these 12 indicators as the thing to watch to check the temperature of the market.

Source: Bloomberg

 

Markets around midday are down heavily, with the ASX 200 falling 1% to 6,832.0

Only two sectors remain in the green today, with Health Care (+0.91%) and Staples (+0.56%) trading positively, while the worst hit around midday are Energy (-2.40%) and Materials (-2.29%) .

All Ords is also down 1.01%, trading at 7,017.8. The Australian Dollar is flat at US 63.1 cents.

The biggest gainers today are Wildcat Resources, up 32.61% after a mega intercept of lithium at its Tabba Tabba project in WA. While the worst performer was Bowen Coking Coal, falling -8.70%, along with much of the energy sector as oil prices continued to slide.

 

Propel Funeral Partners [ASX:PFP] responded to media speculation today, confirming that it had received multiple buyout offers.

Propel’s board responded today, saying that ‘the interest received to date has not been compelling and has, therefore, elected not to engage with any party regarding its interest‘.

Propel operates businesses in over 180 locations in Australia and New Zealand and is within a sector that is often favoured in tougher economic times due to its consistency in demand and market share.

The board said that the offers were ‘unsolicited, preliminary, highly conditional and non-binding’. PFP shares are up by 2.75% in this morning’s trading, but the company remains down 2.58% in the past 12 months.

Wildcat Resources [ASX:WC8] shares have jumped by 25% today as the company announced a broad intercept of lithium at its Tabba Tabba Lithium Project in WA.

Here are the highlights from the announcement today:

Source: WC8

Last Wednesday, we got the first glimmer of hope for Australian wine producers.

Ahead of PM Albanese’s visit to Bejing, China says it intends to take five months to review its wine tariff policy on Australian exports. This comes after nearly three years of an onerous 200% tariff on Australian wines that punished the sector for the poor relations between the two countries.

Anthony Albanese said the review marked a turning point in the trade relationship between the two nations, saying:

“We’re very confident that this will result in, once again, Australian wine, a great product, being able to go to China, free of the tariffs which have been imposed by China,” he said.

Mr Albanese said the review was similar to the review of the barley tariff review that occurred earlier in the year, which led to it being scrapped by China. Mr Albanese’s visit to China on November 4th will include meetings with President Xi and a trade delegation meeting at the China International Import Expo in Shangai.

The good news has already sent share prices like Treasury Wines [ASX:TWE] up by 2% this morning after it released a proactive plan of attack, should the tariffs come down. In a release this morning, Treasury Wine CEO Tim Ford commented:

“It’s great to see an agreement for an expedited pathway forward to allow our Australian brands and wine to be sold in the Chinese market. There are only positives to come out of a favourable review for the Chinese consumer, customers and the wine category, for the Australian wine industry and for TWE.”

However, this is not where the story ends for China’s plays on the international stage.

As Mark Twain once said:

“The principle of give and take is the principle of diplomacy — give one and take ten.“

Over the weekend, China also announced the requirement of export permits for key graphite products to ‘protect national security’, its commerce ministry said.

China is the world’s top producer of graphite, a key ingredient in EV battery anodes and other essential lithium-ion batteries. China produces around 90% of the world’s graphite and significantly refines and produces the particular spherical graphite used in a battery’s negatively charged portion.

This comes at a time when China is stepping up efforts to compete on the international stage in the EV market space, with many of its models drastically outcompeting the likes of Tesla in terms of price as its costs are considerably lower and its manufacturers benefit from vast subsidies.

The EU is considering levying tariffs, targeting these Chinese-made EVs that they claim unfairly benefit from subsidies and are cost-competing with its European rivals.

The U.S. has also fired another salvo in the trade war, expanding its ban on advanced chips to include Nvidia’s latest AI chips, the A800 and H800, for training advanced AI.

China’s move is not a complete ban. Still, it is seen as a significant restriction that could be selectively tuned up and down without facing major headlines as it restricts individual miners on the mainland.