Oil advances whilst the ASX finishes lower: Aus shares down 0.21%

The price of oil has opened higher to start the week after China has pledged to abandon their zero-COVID policy and the US has stated that it will begin replenishing its emergency oil stockpile, giving domestic crude producers access to drill more wells.

BHP (ASX:BHP) closed 0.7 per cent higher, whilst Woodside Petroleum (ASX:WDS) closed 0.42 per cent higher.

At the closing bell, the S&P/ASX 200 was 0.21 per cent lower at 7,133.9.


The Dow Jones futures are pointing to a rise of 28 points.
The S&P 500 futures are pointing to a rise of 5 points.
The Nasdaq futures are pointing to a rise of 16.75 points.
The SPI futures are pointing to a fall of 19 points when the market next opens.

Best and worst performers

The best-performing sector was Energy, up 0.52 per cent. The worst-performing sector was REITs, down 1.1 per cent.

The best-performing stock was Nickel Industries (ASX:NIC), closing 4.97 per cent higher at $0.99. It was followed by shares in United Malt Group (ASX:UMG) and New Hope Corporation (ASX:NHC).

The worst-performing stock was The Star Entertainment Group (ASX:SGR), closing 16.67 per cent lower at $2.15. It was followed by shares in Imugene (ASX:IMU) and Reliance Worldwide Corporation (ASX:RWC).

Asian news

Asian equities are mostly lower Monday. Markets tracking weakness on Wall Street amid ongoing concerns around slowing growth and risk of a policy mistake. Greater China extending losses with mainland stocks underperforming. Tech limiting downside in Hong Kong. Nikkei, Korea and Taiwan the other notable decliners.

So far, Japan’s Nikkei has lost 1.1 per cent, Hong Kong’s Hang Seng has lost 0.64 per cent and China’s Shanghai Composite has lost 1.43 per cent.

Risk off to end the week

Risk off to end the week, setting the stage for a down week after an outsized selloff last week. Hawkish takeaways from this week’s central bank developments, particularly Fed and ECB, still the go-to excuse for the move. Policy mistakes worry picking up as focus shifts to weaker growth backdrop. Growth worries underpinning the earnings risk theme. Technical dynamics are also in focus with a big options expiry today (Bloomberg), recent pickup in selling pressure from some systematic strategies and the potential for market weakness to trigger even more (Bloomberg). China zero Covid pivot complicated by virus spread/fears, which are already weighing on high-frequency data. Some talk of frustrated bulls given the cooler inflation data and an expected seasonal tailwind. However, the path of least resistance has been lower for the better part of the year with bounce attempts repeatedly thwarted by Fed pushback against easing financial conditions and pivot expectations.

December manufacturing and services PMIs miss, but more disinflationary signals

December S&P Global flash manufacturing PMI down 1.5 points m/m, a 31-month low to the weakest since the pandemic peak. New orders saw one of the sharpest declines since GFC in 2009, though cost burden rose by the slowest pace since Jul-20 and selling prices at softest pace since Oct-20. Output expectations also rose to a three-month high, though still below longer-term trends given concerns around industry downturns, inflationary pressures. Flash services PMI fell 1.8 points m/m to 44.4, the lowest in four months, dragged lower by further decline in new orders. However, input cost growth was the softest since Oct-20 and the slowest increase in selling prices in over two years. However, the outlook weakest in two years given concerns around inflation, Fed policy, and weakening demand. Despite mixed takeaways, the report was the latest in a string of data points supporting the peak-inflation narrative.

Some good news this week (particularly on inflation)

Inflation develops the big positive of the week. CPI inflation came in softer than expected for a second straight month in November on the back of a sharp decline in core goods prices. Inflation expectations continued to come down sharply, with the year ahead the lowest since August 2021 in the NY Fed survey. Zillow said asking rents declined 0.4 per cent m/m in November, the largest sequential decline in seven-year history of the Zillow Observed Rent Index. While nothing expected anytime soon, Powell did not completely close the door on tweaking the Fed’s 2 per cent inflation target. Takeaways from high-profile reporters like Adobe and Oracle highlighted a still fairly healthy demand backdrop and good execution in an uncertain environment. In addition, the upbeat outlook from Delta further underpinned the economic normalisation theme, while Lennar highlighted an improvement in availability of labour and materials. Elsewhere, M&A perked up with over $50B in announced deals on Monday alone.

Company news

BBX Minerals (ASX: BBX) has announced that there Bioleaching test work has continued to show excellent results, with the pilot plant testing to begin shortly. The goal of this investigative test work was to demonstrate how the Três Estados complex mineralisation responds to EcoBiome’s patent pending microbial technology. BBX’s Technical Manager Edmar Medeiros said: “After the initial studies of noble metal extraction tests using the bioleaching technique, BBX and EcoBiome continued with the tests aimed at improving the technology for recovering noble metals present in the BBX ore from Brazil.” Shares closed 24.66 per cent higher at $0.091.

PolarX (ASX:PXX) has announced that Northern Star Resources (ASX:NST) subscribed for approximately 10 per cent of the company’s issued capital post raise, after PolarX issued a Placement and Shortfall Placement. PolarX has now raised approximately $3.63 million since 30 November 2022 as drilling continues at the Humboldt Range Project in Nevada. Shares closed 25 per cent higher at $0.015.

Purpose-driven instalment payment platform, Sezzle (ASX:SZL), has announced to the market an update on key financial metrics for the month ended 30 November 2022. The company posted a new high in total revenue, which drove positive results in Net Income and Adjusted EBTDA. Sezzle’s Chairman and CEO Charles Youakim said: “We believe we are the first in our segment to reach profitability, but one month does not make a trend. Our goal for 2023 is to achieve positive Net Income and Adjusted EBTDA.” Shares closed 0.98 per cent higher at $0.515.

Australian medical technology company LBT Innovations (ASX:LBT), through its wholly owned subsidiary Clever Culture Systems, is pleased to announce the appointment of Thermo Fisher Scientific, Inc (Thermo Fisher) as exclusive distributor for the APAS® Independence in Europe. LBT CEO and Managing Director, Brent Barnes said: “Our experience in the United States has shown the benefit of having a full distribution partner with the brand reputation and sales reach of Thermo Fisher. We have learnt from our first year working together, and this established relationship is expected to accelerate our commercial success with customers in Europe.” Shares closed flat at $0.05.

Warrego Energy (ASX:WGO) (Warrego) notes the announcement by Strike Energy (ASX:STX) this morning that it intends to make an off-market takeover offer to acquire all of the shares in Warrego that it does not already own for a consideration of 1 new Strike share for each Warrego share (the Strike Takeover Offer). Strike has indicated that it expects to lodge its Bidder’s Statement in respect of its offer prior to the end of calendar year 2022. There would then be a 14 day period before Strike can open the offer, followed by a minimum offer period of one month. Shares closed 6.67 per cent higher at $0.32.

PropTech Group (ASX:PTG) (PropTech Group) refers to its announcement earlier today and is pleased to now announce that the Australian Securities and Investments Commission has registered its scheme booklet (Scheme Booklet) in relation to the proposed acquisition of PropTech Group by Rockend Technology Pty Limited, a wholly owned subsidiary of MRI Software LLC, by way of a scheme of arrangement, as announced on 31 October 2022. Shares closed 2.63 per cent higher at $0.585.

Commodities and the dollar

Gold is trading at US$1,802.10 an ounce.
Iron ore is trading 0.4 per cent lower at US$112.70 a tonne.
Iron ore futures are pointing to a 2.7 per cent fall.
Light crude is trading $0.66 higher at US$74.95 a barrel.
One Australian dollar is buying 67.02 US cents.