Investment Ideas From the Edge of the Bell Curve
The ASX 200 closed up +1.19% at 7,831.9 points, seeing gains for the second consecutive day, driven by a strong performance in the mining and energy sectors.
Notably, Santos (+4.17%) saw its shares surge amid rumours of potential takeover interest from Middle Eastern investors.
The upward trend mirrored positive sentiment on Wall Street, where both the tech-centric Nasdaq and the S&P 500 reached new record highs.
Investors’ optimism was fueled by speculation that the US Federal Reserve might implement interest rate cuts later in the year.
The bullish market conditions for cuts also boosted the Australian dollar, which reached its strongest position against the US dollar since 1 January. At the close of trading, the Aussie traded at US 67.1 cents.
Rare Earth and tech metal explorers Arafura [ASX:ARU] and WA1 Resources [ASX:WA1] are today’s best performers so far as investors increase their bets of Australia becoming a critical mineral powerhouse.
Today Arafura announced they had received approval by German regulators to receive a US$115 million loan from Euler Hermes (ECA), the German export credit agency.
The deal follows a similar deal with the Australian Government for a US$533 million debt financing package.
The terms for all loan facilities requires Arafura, prior to financial close, to have offtake agreements in place for a minimum 80% of nameplate production after project ramp up.
While the ECA-linked deal requires Arafura to maintain ECA-linked offtake agreements for the term of the loan guarantee (10 years).
Arafura’s Managing Director Darryl Cuzzubbo said:
“We continue to demonstrate the increasing geostrategic importance of the Nolans Project and developing a diversified global NdPr supply chain, this time by securing German export credit agency support.”
“This agreement is linked to offtake with German-based companies, including our key customer Siemens Gamesa, who are global leaders in building wind turbines to advance the energy transition. We look forward to working closely with Euler Hermes as we progress the Nolans Project.”
Meanwhile WA1 is up around 40% since hitting a local bottom in mid-June. The company’s stock has seen heavy speculative buying as more traders take a punt on the future of Niobium metals.
Both companies focus on minerals that are seen as critical for the shift towards Net Zeo, with uses in advanced magnets found in EVs and Wind Turbines.
Amazon is partnering with the Australian Government to build a high-security data centre to house sensitive government information.
AWS, the server arm of Amazon, announced the deal along with Deputy Prime Minister Richard Marles, who said the deal would ‘enhance Defence’s resilience‘.
The government has promised $2 billion over the next decade for the new system, which will be split into three facilities around Australia.
The locations or kinds of information stored were not disclosed with the announcement, presumably for security reasons.
AWS has done similar deals across the pond, with both NZ and the UK also signing deals with Amazon Web Services.
The ASX 200 is up by +1% around 1pm AEST as earlier gains were eroded by underperforming tech and utilities sectors.
Mining is today’s large gainer, bouncing off recent underperformance, up +2.18% as strong commodity prices for precious metal miners and industrials.
Gold is up by +1.24%, while Silver gained +2.76%.
Energy is also a strong-performing sector so far today as speculators pile into Santos, which is up by +4.3% after Bloomberg reported potential bids on the horizon from the Middle East’s two biggest state-owned oil and gas companies, Saudi Aramco and Abu Dhabi National Oil Co.
So far, Santos has denied the speculation, but its gains have helped lift the energy sector up by +1.5%.
Queensland home builder Tamawood [ASX:TWD] released its unaudited FY24 results today, showing a 167.5% increase in profits from last year.
Profit before tax for FY24 came in at $8.08 million, up from $3.02 million in FY23.
Cash on hand at the year-end was $6.11 million, up from $5.2 in FY23 and the company says it remains debt free.
The company pointed to their ‘Project DeRisk’ enterprise project management software, allowing the company to maintain its margins and its cost savings from its acquisition of Astivita.
Shares are up by nearly +5% in trading this morning, trading at $2.53 per share.
The Australian competition watchdog, the ACCC, said today that it has ‘preliminary concerns’ over Supalia and Stockland’s proposed acquisition of 12 of Lendleases’s residential communities.
The ACCC said that residential community builders could see lower competition in regional Australia as a result of the deal, saying:
‘We are concerned that the proposed acquisition would remove one of Stockland’s closest and largest competitors in the supply of residential masterplanned community housing lots in four regions – the Illawarra, North West Perth, Ipswich, and Moreton Bay,’ ACCC Commissioner Liza Carver said.
The regulator says it has not yet reached a decision on the matter and is inviting submissions in response to its claim.
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The rumour mills are spinning as Bloomberg reports that Saudi Aramco and Abu Dhabi National Oil Co are both considering potential bids for Aussie gas giant Santos [ASX:STO].
Santos has so far brushed off the claims, saying the company, ‘does not comment on market speculation,‘ however the energy space is small enough that the market is taking notice.
Shares in Santos are up by +4.20% in early trading today, at $8 per share. The company has been trading flat so far this year after the failed merger with Woodside left leadership under pressure to find a new direction to revive its share price.
Whether these rumours actually materialise into a serious offer is circumspect at this point. The leaking of the early-stage talks could be part of a larger game of signalling by any of the parties involved, and even if a serious offer materialised, it would be a long road to pass the Foreign Investor Review Board.
Regardless, traders are piling in today so watch this stock.
Good morning. Charlie here,
The ASX 200 is set for a strong day of gains as overseas markets close higher. ASX Futures points to an 0.8% gain on opening this morning as an extended bull run on Wall Street, combined with easing bond yields and higher commodity prices.
S&P 500 and Nasdaq both posted fresh highs, with another day of great gains by Nvidia (+4.5%), Broadcom (+4.3%), and Tesla (+6.5%), which has seen huge inflows since its better-than-expected quarterly delivery numbers earlier this week.
Meanwhile, the Yen has dropped to a 38-year low versus the US dollar as expectations of BoJ intervention came and went, with the Japanese Central Bank so far holding off until US bond yields.
Traders will keep a close eye on the politics in the next few weeks. A heated election in France that finishes Sunday could stirr European markets, while the UK heads to the polls tomorrow, with the Labour Party slated to win its first victory in 14 years.
Talk of pressure for Biden to step aside has also increased in the US, while traders have increased their bets on a Trump victory that could push US bond yields higher.
On the ASX today, expect strong performances from the major miners and tech stocks, with financials also likely to have strong innings.
Santos will be one to watch today as rumours of bids being considered by state-owned Saudi Aramco and Abu Dhabi National Oil Co, who are both looking to ramp up their overseas gas portfolio.
Name | Value | % Chg | |
---|---|---|---|
Major Indices | |||
S&P 500 | 5,537.02 | +0.51% | |
Dow Jones | 39,308.0 | -0.06% | |
NASDAQ Comp | 18,188.30 | +0.88% | |
Russell 2000 | 2,036.62 | +0.14% | |
Country Indices | |||
UK | 8,171.12 | +0.61% | |
Germany | 18,374.53 | +1.16% | |
Japan | 40,580.76 | +1.26% | |
Hong Kong | 17,978.57 | +1.18% | |
Euro | 4,965.80 | +1.21% |
Name | Value | % Chg | |
---|---|---|---|
Commodities (USD) | |||
Gold | 2,332.23 | +1.21% | |
Silver | 29.43 | +3.19% | |
Iron Ore | 1113.45 | +3.2% | |
Copper | 4.536 | +2.66% | |
WTI Oil | 83.66 | +1.01% | |
Currency | |||
AUD/USD | 67.09¢ | +0.59% | |
Cryptocurrency | |||
Bitcoin (USD) | 60,248 | -1.03% | |
Ethereum (USD) | 3,296 | -2.39% |
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Investment ideas from the edge of the bell curve.
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