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Good afternoon, and welcome to HotCopper’s the ASX Today for Wednesday of Week 21, I’m Jon Davidson. This afternoon, we’re back to where we were on Monday again, as inflation fears in the U.S. mean the world’s largest Treasury market is flashing warning signs we haven’t seen since the GFC in 2007.
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Right now, the U.S. 30Y bond yield is at 5.2%, it hasn’t been there since 2007, and the U.S. 10Y bond yield is flirting with 4.7%. That’s where it becomes questionable whether the U.S. government can, on paper, pay back its mammoth debt, which means concerns about whether the U.S. can pay back long-term bonds.
The U.S. treasury market is the largest in the world, and it’s sending one clear signal: The U.S. is in dangerous territory. Conversely, a Fed hike is expected next month, which implies a stronger US dollar, which is currently at a six-week high, sucking some excitement out of equities. A lot going on.
At home, global panic has pushed gold below US$4,500 an ounce and iron ore down to US$107/tn in Singapore after weak Chinese economic data – put that together, and you get a bad day for materials. BHP trading at $57.50 a share, the last time I looked; still pretty good for anybody holding on for twelve months.
Ongoing chatter about the new Federal budget CGT changes remains on the agenda, and if you close your eyes and listen carefully, you’ll hear talking heads now framing those changes as a “proposal,” suggesting to me public opinion is starting to bite.
Anyway, back to the ASX. A bad day for materials as mentioned, but a surprisingly good day for James Hardie despite what’s fair to call a profit collapse, that stock actually trading flattish green after revealing profits were down -75% versus the prior period. Despite a sharp sell-off right out the gate, the stock was where it was around mid-COVID, which can either be a good or a bad thing depending on how you look at it. But the company’s investors are definitely resilient, to say the least.
Elsewhere, partial excitement for lithium bulls was tempered by an otherwise fairly poor day for macro as Core Lithium expects to start selling spodumene concentrate again by the December quarter, which comes after an uptick in lithium prices, which also saw MinRes recommence operations at Bald Hill earlier this week. Some green shoots at least among the mire.
Finally, while now de-listed, we got some closure on the Rex Airlines saga of a few years ago, with the Chair of that company admitting in court today that Rex Airlines misled investors about future profitability when it was listed on the ASX, even as it was quite clear the company was in shambles. We don’t know the punishment yet, but a big fine is probably coming down the pipeline.
That’s the ASX Today for Wednesday, I’m Jon Davidson, have a great night.
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