ASX News LIVE | XJO to Rise; Oil Prices Jump as Tensions in Middle East Take Centre Stage

The Australian sharemarket witnessed a notable uptick, primarily propelled by a sharp surge in energy and gold stocks. This surge was triggered by a significant increase in oil prices in Asia, following the disturbing incursions by Hamas into Israel over the weekend.

At the closing bell, the benchmark ASX 200 saw an increase of 0.23%, reaching 6970.2 points. The All Ordinaries also rose, gaining 14 points and closing at 7157 points.

The unexpected attacks on Israel led to a rapid surge in oil prices, exceeding 4%, compelling investors to flock to gold, a traditional safe haven asset. The price of gold climbed by 0.9% in Asian markets, reaching US$1848.99 per ounce on the spot market.

Gold stocks also saw a positive uptick due to the spike in the precious metal’s price. Capricorn Metals led the way with a substantial increase of 5.4%, reaching $4.33. Newcrest, another prominent player in the gold industry, witnessed a gain of 4.7%, closing at $25.42, while Regis jumped by 5% to $1.59.

On the flip side, major iron ore miners experienced a mixed day, with some paring earlier gains due to the weakening iron ore price. BHP edged up by a marginal 0.1%, closing at $44.03, while Fortescue faced a 1.9% decline, settling at $20.67.

The Australian sharemarket witnessed a notable uptick, primarily propelled by a sharp surge in energy and gold stocks. This surge was triggered by a significant increase in oil prices in Asia, following the disturbing incursions by Hamas into Israel over the weekend.

At the closing bell, the benchmark ASX 200 saw an increase of 0.23%, reaching 6970.2 points. The All Ordinaries also rose, gaining 14 points and closing at 7157 points.

The unexpected attacks on Israel led to a rapid surge in oil prices, exceeding 4%, compelling investors to flock to gold, a traditional safe haven asset. The price of gold climbed by 0.9% in Asian markets, reaching US$1848.99 per ounce on the spot market.

Gold stocks also saw a positive uptick due to the spike in the precious metal’s price. Capricorn Metals led the way with a substantial increase of 5.4%, reaching $4.33. Newcrest, another prominent player in the gold industry, witnessed a gain of 4.7%, closing at $25.42, while Regis jumped by 5% to $1.59.

On the flip side, major iron ore miners experienced a mixed day, with some paring earlier gains due to the weakening iron ore price. BHP edged up by a marginal 0.1%, closing at $44.03, while Fortescue faced a 1.9% decline, settling at $20.67.

The Senate committee investigating the Commonwealth Bilateral Air Service Agreements has released its conclusive findings this afternoon. The report reveals compelling evidence of Qantas’ “aggressive use of market power” concerning the federal government’s denial of additional flights requested by Qatar Airways.

Established just last month, the Senate committee was a response to the government’s rejection of Qatar Airways’ plea for 28 extra weekly flights, a decision justified by Transport Minister Catherine King as being in the “national interest.”

The report avoided directly pointing fingers at the government or minister, but the implication was certainly one of background pressure.

In its final report, the committee has outlined ten key recommendations. Among them is a call for the competition watchdog to resume its oversight of domestic airlines and an urgent request for the federal government to “promptly reassess” its earlier decision.

Senator Bridget McKenzie, chair of the committee and Nationals Senator, emphasised that the recommendations were geared towards ensuring Australians benefit from more affordable airfares, saying:

‘At a time of a cost-of-living crisis in Australia the Government has made decisions that have protected Qantas’ market share and kept the cost of airfares higher for Australian families and exporters, and they have delayed making critical decisions to improve the reliability of domestic travel especially at Sydney Airport,’ Senator McKenzie said.

‘The committee heard evidence that Australians could have been enjoying cheaper flights to Europe and the Middle East as early as April this year had the Government approved additional Qatar Airways flights, and that Turkish Airlines had planned to offer additional flights in time for families to reunite overseas this Christmas.’

‘Clear evidence was provided of the aggressive use of market power by Qantas and the committee has called for reinstatement of Australian Competition and Consumer Commission monitoring of the domestic airline industry and for the competition watchdog to inquire into anti-competitive behaviour in the sector.’

The Senate committee investigating the Commonwealth Bilateral Air Service Agreements has released its conclusive findings this afternoon. The report reveals compelling evidence of Qantas’ “aggressive use of market power” concerning the federal government’s denial of additional flights requested by Qatar Airways.

Established just last month, the Senate committee was a response to the government’s rejection of Qatar Airways’ plea for 28 extra weekly flights, a decision justified by Transport Minister Catherine King as being in the “national interest.”

The report avoided directly pointing fingers at the government or minister, but the implication was certainly one of background pressure.

In its final report, the committee has outlined ten key recommendations. Among them is a call for the competition watchdog to resume its oversight of domestic airlines and an urgent request for the federal government to “promptly reassess” its earlier decision.

Senator Bridget McKenzie, chair of the committee and Nationals Senator, emphasised that the recommendations were geared towards ensuring Australians benefit from more affordable airfares, saying:

‘At a time of a cost-of-living crisis in Australia the Government has made decisions that have protected Qantas’ market share and kept the cost of airfares higher for Australian families and exporters, and they have delayed making critical decisions to improve the reliability of domestic travel especially at Sydney Airport,’ Senator McKenzie said.

‘The committee heard evidence that Australians could have been enjoying cheaper flights to Europe and the Middle East as early as April this year had the Government approved additional Qatar Airways flights, and that Turkish Airlines had planned to offer additional flights in time for families to reunite overseas this Christmas.’

‘Clear evidence was provided of the aggressive use of market power by Qantas and the committee has called for reinstatement of Australian Competition and Consumer Commission monitoring of the domestic airline industry and for the competition watchdog to inquire into anti-competitive behaviour in the sector.’

Renewables junior GENEX Power has seen its shares by 10% today as it announced a 25-year solar power purchase agreement with Fortescue for the Bulli Creek Solar and Battery Project (BCP).

Under the deal, Fortescue has agreed to take up to 337.5MW of solar energy in connection with its Gibson Island Project to produce green hydrogen and ammonia.

Genex also announced that it is in discussions to build a battery storage system of up to 400MW with the potential of further capacity.

Commenting on today’s announcement, Genex CEO Craig Francis said:

‘Today’s announcement marks a major milestone, not only for Genex’s 2.25GW development portfolio, but also for the Australian energy transition to renewables. Genex acquired the up to 2GW Bulli Creek Battery and Solar Project in August 2022, initially envisioning a stand-alone battery energy storage system as a first stage for the project. However, securing this long term 25-year offtake agreement with Fortescue for 337.5MW of solar capacity at Bulli Creek has reshaped the first stage of the project into a large-scale solar farm.’

‘Genex and J-POWER anticipate the agreement with Fortescue will underpin a solar farm capacity of 450MW, with the long-term nature of the agreement highly attractive for prospective project financiers. Discussions are continuing with external parties for further offtake to support a solar farm capacity of up to 775MW for this first stage of the project. This would position the Bulli Creek Solar Farm as the largest solar farm connected to the National Electricity Market.’

‘We are extremely pleased to be working with Fortescue and supporting their plans for a large-scale electrolysis plant at Gibson Island, which we anticipate will help pave the way for a significant and prosperous green hydrogen and ammonia industry in Australia.’

Renewables junior GENEX Power has seen its shares by 10% today as it announced a 25-year solar power purchase agreement with Fortescue for the Bulli Creek Solar and Battery Project (BCP).

Under the deal, Fortescue has agreed to take up to 337.5MW of solar energy in connection with its Gibson Island Project to produce green hydrogen and ammonia.

Genex also announced that it is in discussions to build a battery storage system of up to 400MW with the potential of further capacity.

Commenting on today’s announcement, Genex CEO Craig Francis said:

‘Today’s announcement marks a major milestone, not only for Genex’s 2.25GW development portfolio, but also for the Australian energy transition to renewables. Genex acquired the up to 2GW Bulli Creek Battery and Solar Project in August 2022, initially envisioning a stand-alone battery energy storage system as a first stage for the project. However, securing this long term 25-year offtake agreement with Fortescue for 337.5MW of solar capacity at Bulli Creek has reshaped the first stage of the project into a large-scale solar farm.’

‘Genex and J-POWER anticipate the agreement with Fortescue will underpin a solar farm capacity of 450MW, with the long-term nature of the agreement highly attractive for prospective project financiers. Discussions are continuing with external parties for further offtake to support a solar farm capacity of up to 775MW for this first stage of the project. This would position the Bulli Creek Solar Farm as the largest solar farm connected to the National Electricity Market.’

‘We are extremely pleased to be working with Fortescue and supporting their plans for a large-scale electrolysis plant at Gibson Island, which we anticipate will help pave the way for a significant and prosperous green hydrogen and ammonia industry in Australia.’

As eyes turn to the Middle East conflict, money inflows into Crude, USD, Gold, and Bitcoin are all up.

Some initial movements began last week when the US bond market fell heavily again, and yields rose. Yields are back to those levels, with US 10-year treasuries at 4.80%.

Bitcoin has moved out of its bearish positioning after failing to pass the 30k resistance and falling to nearly 25k in mid-September.

‘We’ve seen increased BTC buying, especially on Coinbase, since Sept. 28, suggesting institutional demand is rising,’ said Dessislava Ianeva, a senior researcher at Kaiko

Similarly, Gold has begun recovering from its heavily sold-off position, gaining 0.87% today. It still has a way to go before recovering its 8% drop in the past six months, but it has become appealing for many looking for a financial liferaft.

Oil is now up nearly 5% in intraday trading as investors digest the attack on Israel.

Editor Ryan Dinse thinks the concerns in the market are warranted and is happy to hold BTC.

Click below to find out why.

https://www.moneymorning.com.au/20231009/on-the-precipice.html

As eyes turn to the Middle East conflict, money inflows into Crude, USD, Gold, and Bitcoin are all up.

Some initial movements began last week when the US bond market fell heavily again, and yields rose. Yields are back to those levels, with US 10-year treasuries at 4.80%.

Bitcoin has moved out of its bearish positioning after failing to pass the 30k resistance and falling to nearly 25k in mid-September.

‘We’ve seen increased BTC buying, especially on Coinbase, since Sept. 28, suggesting institutional demand is rising,’ said Dessislava Ianeva, a senior researcher at Kaiko

Similarly, Gold has begun recovering from its heavily sold-off position, gaining 0.87% today. It still has a way to go before recovering its 8% drop in the past six months, but it has become appealing for many looking for a financial liferaft.

Oil is now up nearly 5% in intraday trading as investors digest the attack on Israel.

Editor Ryan Dinse thinks the concerns in the market are warranted and is happy to hold BTC.

Click below to find out why.

https://www.moneymorning.com.au/20231009/on-the-precipice.html

Government workers within Services Australia will go on strike today, with other Australian Public Service staff planning industrial action over complaints that salaries are not keeping pace with inflation.

Members of the Community and Public Sector Union (CPSU) will strike for 24 hours from today seeking a better pay offer.

The union has rejected the federal government’s revised pay offer of 11.2% over three years, saying it doesn’t match cost-of-living pressures.

‘There are very real cost-of-living pressures on workers right across the economy, and the public sector is no different,’ said CPSU national secretary Melissa Donnelly.

‘The Albanese Labor government can and should do better on pay for its own workforce.’

Ms Donnelly said she expects the strike will impact services like Centrelink; however, payments will not be affected.

‘It is unfortunately likely to have some impact on services across the Services Australia network,’ she said.

‘Be it customers contacting the smart centres, that is the call centres, or people attending in face in service centres.’

Government workers within Services Australia will go on strike today, with other Australian Public Service staff planning industrial action over complaints that salaries are not keeping pace with inflation.

Members of the Community and Public Sector Union (CPSU) will strike for 24 hours from today seeking a better pay offer.

The union has rejected the federal government’s revised pay offer of 11.2% over three years, saying it doesn’t match cost-of-living pressures.

‘There are very real cost-of-living pressures on workers right across the economy, and the public sector is no different,’ said CPSU national secretary Melissa Donnelly.

‘The Albanese Labor government can and should do better on pay for its own workforce.’

Ms Donnelly said she expects the strike will impact services like Centrelink; however, payments will not be affected.

‘It is unfortunately likely to have some impact on services across the Services Australia network,’ she said.

‘Be it customers contacting the smart centres, that is the call centres, or people attending in face in service centres.’

ASX 200 is up 0.50% to 6,989.7 as the market responds to tensions building in the Middle East.

Spiking oil prices have rallied the Energy Sector, which is up 2.68% today as concerns about supply disruptions run ahead of any material change to the market.

WTI traded above US$86 a barrel, while Brent Crude is also up 4$, trading at US$87.82.

Concerns about rising oil prices adding to inflationary pressures and Fed rates has also come back into the fore, with analysts such as Guillermo Santos, head of strategy at banking firm Capital, remarking today:

‘Any extension of this to oil-producing countries, Saudi Arabia in the lead, could make the price of crude oil more expensive, with negative inflationary effects for the West and would mean higher rates for longer‘.

Mining stocks were also up today, with the Materials Sector gaining 1.14%. BHP is up 0.73%, Rio gained 0.64%, while Newcrest gained 4.74%.

ASX 200 is up 0.50% to 6,989.7 as the market responds to tensions building in the Middle East.

Spiking oil prices have rallied the Energy Sector, which is up 2.68% today as concerns about supply disruptions run ahead of any material change to the market.

WTI traded above US$86 a barrel, while Brent Crude is also up 4$, trading at US$87.82.

Concerns about rising oil prices adding to inflationary pressures and Fed rates has also come back into the fore, with analysts such as Guillermo Santos, head of strategy at banking firm Capital, remarking today:

‘Any extension of this to oil-producing countries, Saudi Arabia in the lead, could make the price of crude oil more expensive, with negative inflationary effects for the West and would mean higher rates for longer‘.

Mining stocks were also up today, with the Materials Sector gaining 1.14%. BHP is up 0.73%, Rio gained 0.64%, while Newcrest gained 4.74%.

Parent company of IGA, Metcash, has announced the unexpected retirement of Chris Baddock, CEO of its liquor branch.

Mr Baddock cited health reasons for his retirement without further details. General Manager John Barakat takes the role in the interim as the company now searches for a replacement.

Metcash CEO Doug Jones thanked Mr Baddock today for his ‘significant contribution’ in growing the company.

Shares in the company are down 0.67% this morning, trading at $3.70 per share.

Parent company of IGA, Metcash, has announced the unexpected retirement of Chris Baddock, CEO of its liquor branch.

Mr Baddock cited health reasons for his retirement without further details. General Manager John Barakat takes the role in the interim as the company now searches for a replacement.

Metcash CEO Doug Jones thanked Mr Baddock today for his ‘significant contribution’ in growing the company.

Shares in the company are down 0.67% this morning, trading at $3.70 per share.

The COVID-19 savings build-up by households could run out as soon as March, according to AFR reporting.

Barrenjoey Chief Economist Jo Masters is quoted saying:

‘If you split households by income, the bottom 60 per cent have basically already used up that stock of savings,’

‘We think that by March, 80 per cent of households will have effectively used it and the other 20 per cent that haven’t, they won’t need to use it.’

‘So going forward, it tells you that consumption growth has to be in line with real income growth.’

The high burn rate affecting homeowners who face eye-wateringly high mortgage costs will likely continue to depress retail spending.

In the most recent Statement of Monetary Policy, the RBA echoed these warnings but indicated that the issue was hard to predict easily:

‘Weakness in household consumption could persist for longer than expected if weak real disposable income growth has a larger-than expected effect, particularly on low-income households that typically have lower savings buffers.’

Source: AFR

The COVID-19 savings build-up by households could run out as soon as March, according to AFR reporting.

Barrenjoey Chief Economist Jo Masters is quoted saying:

‘If you split households by income, the bottom 60 per cent have basically already used up that stock of savings,’

‘We think that by March, 80 per cent of households will have effectively used it and the other 20 per cent that haven’t, they won’t need to use it.’

‘So going forward, it tells you that consumption growth has to be in line with real income growth.’

The high burn rate affecting homeowners who face eye-wateringly high mortgage costs will likely continue to depress retail spending.

In the most recent Statement of Monetary Policy, the RBA echoed these warnings but indicated that the issue was hard to predict easily:

‘Weakness in household consumption could persist for longer than expected if weak real disposable income growth has a larger-than expected effect, particularly on low-income households that typically have lower savings buffers.’

Source: AFR

The US dollar climbed against all its significant trading peers today as Forex traders shifted to the ‘safehaven greenback’.

Hamas’s unexpected and deadly attack within Israel has sent shockwaves throughout the region. More than 1,100 have been killed in fighting as militants from the militant group Hamas launched rocket attacks and major incursions on multiple fronts.

Reporting from the WSJ has directly implicated the Iranian Revolutionary Guard in the planning of the attack, which has involved the mass abductions of civilians, rocket attacks, and paragliding infiltrations.

Border skirmishes from Lebanon have also taken place with the other Iranian-backed militant Hezbollah, potentially creating a broader conflict that could spill into a direct confrontation between Iran and Israel.

Oil prices have spiked 3% after the news as traders fear potential supply disruptions from a wider conflict. While still 8.22% down from their September spike, the jump has caused some concern for US traders as the Strategic Petroleum Reserve stands at its lowest in history, at around 17 days.

As geopolitical tensions now spread across the Middle East, oil prices are likely to spike even further.

Meanwhile, the US Strategic Petroleum Reserves (SPR) have 17 days of supply remaining, their lowest in history.

This is roughly half the historical average of ~33 days… pic.twitter.com/QGAspUXsUR

— The Kobeissi Letter (@KobeissiLetter) October 7, 2023

The US dollar climbed against all its significant trading peers today as Forex traders shifted to the ‘safehaven greenback’.

Hamas’s unexpected and deadly attack within Israel has sent shockwaves throughout the region. More than 1,100 have been killed in fighting as militants from the militant group Hamas launched rocket attacks and major incursions on multiple fronts.

Reporting from the WSJ has directly implicated the Iranian Revolutionary Guard in the planning of the attack, which has involved the mass abductions of civilians, rocket attacks, and paragliding infiltrations.

Border skirmishes from Lebanon have also taken place with the other Iranian-backed militant Hezbollah, potentially creating a broader conflict that could spill into a direct confrontation between Iran and Israel.

Oil prices have spiked 3% after the news as traders fear potential supply disruptions from a wider conflict. While still 8.22% down from their September spike, the jump has caused some concern for US traders as the Strategic Petroleum Reserve stands at its lowest in history, at around 17 days.

As geopolitical tensions now spread across the Middle East, oil prices are likely to spike even further.

Meanwhile, the US Strategic Petroleum Reserves (SPR) have 17 days of supply remaining, their lowest in history.

This is roughly half the historical average of ~33 days… pic.twitter.com/QGAspUXsUR

— The Kobeissi Letter (@KobeissiLetter) October 7, 2023

Dairy producer Fonterra raised its FY24 season forecast for its Farmgate Milk Price range to $6.50 to $8 per kg of milksolids.

Chief Executive Miles Hurrel commented on the lifted forecast today, saying:

‘Here in New Zealand, we’re forecasting collections to be slightly below last season, while aggregate milk growth in key export countries is expected to be below average for FY24.‘

‘The El Nino weather pattern may have further impacts on supply, and this could be driving recent buyer sentiment.’

‘On the demand side, we have seen increases in recent Global Dairy Trade events. While this has been encouraging, it is not yet clear whether the stronger demand from China will be sustained. For other key regions, customers remain relatively cautious in terms of their forward purchases.’

Dairy producer Fonterra raised its FY24 season forecast for its Farmgate Milk Price range to $6.50 to $8 per kg of milksolids.

Chief Executive Miles Hurrel commented on the lifted forecast today, saying:

‘Here in New Zealand, we’re forecasting collections to be slightly below last season, while aggregate milk growth in key export countries is expected to be below average for FY24.‘

‘The El Nino weather pattern may have further impacts on supply, and this could be driving recent buyer sentiment.’

‘On the demand side, we have seen increases in recent Global Dairy Trade events. While this has been encouraging, it is not yet clear whether the stronger demand from China will be sustained. For other key regions, customers remain relatively cautious in terms of their forward purchases.’

Good morning all,

The ASX 200 opened up 0.39% to 6,981.4.

The move mirrored international markets, buoyed by unexpectedly strong job numbers out of the US that showed 336,000 jobs were added in September, well above the expected 170,000.

The first reaction to the news was negative as traders bet on a more hawkish Fed. However, markets calmed down, and stocks gained upside momentum as traders cheered the strong economy, which continues to create jobs despite rising interest rates.

Oil prices jumped 3.3% on news of the attack by Hamas forces on Israel, the deadliest attack since the Yom Kippur War of 1973. Reporting by the WSJ has directly implicated Iran in the plot to attack, raising concerns of the conflict spreading to a larger Middle East War.

The Dow finished up 0.87%, the tech-heavy Nasdaq was up 1.60%, and the S&P 500 closed up 1.18% on Friday.

Despite these gains, the market fears the Fed’s next move. The Dow is down -1.16% for the year, and the S&P 500 has finished in the red for five consecutive weeks.

The Aussie dollar continues to weaken, falling -0.38%, reaching AU/USD 63.58 cents, near an 11-month low.

There were gains over the weekend in the AUD as the US Dollar fell as market risk appetite flipped risk-on to close out the trading week.

Bonds remain a central concern to many traders as US 10-year Treasury yields gained eight bps to hit 4.80%; some hold concerns for this to continue to climb until something breaks or the Fed steps in.