Live ASX Updates | Wednesday 3rd August

Lithium producer Pilbara Minerals (ASX:PLS) held its eighth spodumene concentrate auction earlier on Wednesday via its digital Battery Material Exchange.

Pilbara was auctioning a cargo of 5,000 dry metric tonnes at a target grade of 5.5% lithia.

Pilbara received 67 bids, saying ‘strong interest continues to be received in both participation and bidding by a broad range of qualified buyers.’

The highest bid fetched US$6,350/dmt, which Pilbara said was around US$7,012/dmt on a pro rata basis.

Last month, its digital auction yielded a highest bid of US$6,188/dmt (US$6,841/dmt on a pro rata basis).

The month before that, the highest bid was US$6,350/dmt, with a pro rata equivalent price of US$7,017/dmt.

In a separate presentation released today, Pilbara said lithium pricing ‘remains strong.’

PLS shares closed 2% higher.

Global shipping costs are falling in a sign of easing supply chain pressures and slowing economies.

Shipping costs falling at incredibly rapid rate … y/y change in cost to ship 40ft container from Shanghai to Los Angeles has dropped to -32%, lowest since start of pandemic pic.twitter.com/ZOfxw9ZQTk

— Liz Ann Sonders (@LizAnnSonders) August 2, 2022

The Baltic Dry Index, a key measure of global shipping costs, is back at its long-run mean as supply disruptions continue to ease. pic.twitter.com/ZpwZB4MbXe

— Longview Economics (@Lvieweconomics) August 2, 2022

Are the markets misreading the US Federal Reserve’s intention to curb inflation?

Earlier this week, Fat Tail Investment Research’s Callum Newman, editor of Australian Small-Cap Investigator, spoke with former Fed insider Joseph Wang, aka the Fed Guy.

Joseph spent five years as a senior trader for the Fed on the open markets desk.

During the interview, Joseph told Cal that:

‘By all indications, the US Federal Reserve is going to continue to tighten. Yet markets don’t seem to be very good at pricing regime changes and it seems to me we are in one right now.’

The Fed wants to meet its price stability mandate and tamp down inflation…whether inflation is driven mostly by supply shocks or not.

The markets have to calibrate their expectations of Fed policy accordingly.

As Joseph concluded in a recent post (emphasis added):

‘The market’s implied path of policy appears to misunderstand the Fed’s priorities. Over the past few weeks the market has more aggressively priced in rate cuts in early 2023 following a string of weak economic data.

‘The Fed’s current priority is inflation, and then full employment. This means declining economic activity is a desired outcome of monetary policy and not a reason for a dovish pivot.

‘Nominal spending fueled by wages, wealth, and credit continues to grow at an exceptional rate, suggesting that monetary policy may still be too accommodative.

‘The market’s move to price in rate cuts is effectively easing financial conditions when the effects of tightening are just materializing. The Fed will have to strongly push against market pricing to retighten monetary policy.’

 

ASX BNPL stocks closed higher on Wednesday.

• Splitit (ASX:SPT) closed 10.5% higher
• Zip (ASX:ZIP) closed 8.5% higher
• Block (ASX:SQ2) closed 5% higher
• IOUpay (ASX:IOU) closed 5% higher
• Sezzle (ASX:SZL) closed 3% higher

Can #BNPL stocks like $ZIP and $SZL become profitable?

Is the BNPL business model viable?

— Fat Tail Daily (@FatTailDaily) August 2, 2022

Openpay (ASX:OPY) was one of the few BNPL stocks to edge lower on Wednesday. After rallying from 12 cents in 30 June all the way to 50 cents in 28 July, the OPY stock is trading back down at 30 cents.

OPY shares are now down over 30% in the past five days.

Fellow BNPL player Laybuy (ASX:LBY) is down 25% in the past seven days after rallying from 4 cents to 15 cents late last month.

Block, who acquired Afterpay in the largest takeover deal in ASX history, is set to report its latest results on Friday.

https://www.moneymorning.com.au/20220729/why-did-asx-bnpl-stocks-like-sezzle-asxszl-surge-in-july.html

 

Stocks specializing in metals critical for producing EV batteries closed higher on Wednesday.

– Lake Resources (ASX:LKE) closed 11% higher
– Renascor Resources (ASX:RNU) closed 10% higher
– Ioneer (ASX:INR) closed 9.5% higher
– Novonix (ASX:NVX) closed 8.5% higher
– Sayona Mining (ASX:SYA) closed 8.5% higher
– Global Lithium (ASX:GL1) closed 7.9% higher
– Galan Lithium (ASX:GLN) closed 7% higher
– Core Lithium (ASX:CXO) closed 4% higher
– Syrah Resources (ASX:SYR) closed 3.5% higher

Today’s spike in battery tech metal stocks comes after Japanese automaker Nissan announced it will let drivers rent its EVs for several years instead of purchasing them to keep more critical metals the EVs require within Japan.

Yutaka Horie, president of 4R Energy, Nissan’s joint venture with Sumitomo, told the Financial Times:

“One challenge is that the Leaf [Nissan model], including its batteries, are exported abroad as used cars and there are fewer vehicles left in Japan. We want people to understand the value of used batteries and we want these cars to remain in Japan.”