Energy rally pushes ASX 4.5pc higher on the week in biggest weekly gain in 2 years
Energy stocks offset an 0.8 per cent loss for the sharemarket on Friday after the OPEC+ group of major oil producers announced large output cuts, sending oil prices sharply higher.
On the week, Australian shares have leapt 4.5 per cent in the largest weekly gain in two years.
Energy was the only sector out of the index’s 11 categories in the black.
Origin Energy rose 1.2 per cent to $5.77, Santos gained 1.9 per cent to $7.9, and Woodside Energy firmed 0.2 per cent to $34.83.
Karoon Energy leapt 9.1 per cent after the Brazilian government oil and gas regulator agreed a reduction in the royalty rate in the Baúna project.
Coal miners Whitehaven and New Hope, yet again, scaled fresh record highs. Whitehaven topped the index with a leap of 4.8 per cent and New Hope 1.2 per cent.
Fund manager GQG cratered 3.1 per cent after being hit by the UK pension fund cash scramble.
All four major banks retreated. Macquarie Group shed 1.1 per cent.
AGL Energy declined 2.9 per cent after rejecting three of the four director candidates put forward by its biggest shareholder Mike Cannon-Brookes.
Allkem powered up 3.1 per cent after securing a $US200 million loan to finance a battery-grade lithium carbonate project in Argentina.
Bendigo and Adelaide Bank lifts variable home loan rates by 0.25pc
Bendigo and Adelaide Bank will increase its variable home loan rate by 0.25 percentage points on October 14. The rate on the reward saver deposit will be raised by the same amount on October 26.
Seven Group, Santos climb to the highest in three weeks
Shares in Seven Group rose 0.4 per cent to $18.39 and touched its highest since mid-September. The company raised $250 million in notes exchangeable into Boral shares at $3.77, representing a premium of 30 per cent. Shares in Boral dipped 0.7 per cent.
Santos gained 2.1 per cent and also climbed to a peak last seen mid-September. The company has leapt more than 11 per cent this week, buoyed by a rally in oil prices.
ASX set with largest weekly gain in two years
With less than 1h of trading left, the ASX looked set to post its largest weekly gain in two years. Australian shares have leapt 4.7 per cent since Monday, dragged higher by a 10.3 per cent weekly jump in energy stocks. The S&P/ASX 200 retreated 0.5 per cent on Friday, tracking a global equity decline on recession fears as the Federal Reserve is determined to push interest rates higher.
Zombie collapse could trigger next sub-prime crisis
For better or worse, we live in a twilight zone spanning two worlds. First there is the old world, where interest rates were to remain low-for-long, the cost of borrowing was the cheapest it had ever been, and central banks and fiscal treasuries could immediately alleviate every financial ill with ever more extreme forms of stimulus and money printing (aka quantitative easing) to bid up the value of all assets.
For years this column has argued that state interventions that manipulated financial market processes to adjust price signals so that capital and labour were allocated as the state (not the collective wisdom of the crowd) dictated undermined the very source of capitalism’s prosperity producing machine – that is, creative destruction.
There is, of course, a role for governments to intervene temporarily when markets fail because of the asymmetric information induced by extreme shocks, like the one-in-100-year pandemic. But the elixir of zero rates, endless unfunded fiscal spending and “QE-to-infinity” has been the ultimate panacea for both politicians and central banks desperate to satisfy the hedonistic masses.
All that changed when the inevitable inflation shock arrived. This brings us to the new world. The mother of all inflation pulses was definitionally unavoidable precisely because the aforementioned unconditional policy stimulus programs would be continuously rolled out to solve every conceivable economic problem, until they generated their own binding constraint in the form of unacceptably high consumer price pressures.
The pandemic was an unusually potent melting pot for the inflation shock because it precipitated both intense supply-side and demand-side influences. Goods and services suddenly became hard to access. Concurrently, global unemployment rates fell to the lowest levels in more than half a century. It was the perfect storm for nascent wage/price spirals.
Australian dollar set for first weekly gain in a month
The Australian dollar was on track to post its first weekly gain in a month. It has gained 0.3 per cent gain so far this week, having also edged up 0.3 per cent on Friday to US64.27¢. It touched a 2 1/2 low of US63.61¢ last week.
The local dollar has tumbled more than 11 per cent this year, while its NZ counterpart has plunged 17 per cent as investors piled into the safe-haven greenback on fears higher interest rates will tip the world economy into recession.
AGL rejects three Grok director candidates
Cecile Lefort, Angela Macdonald-Smith
AGL said appointing all four of the Grok candidates for election as directors at the AGM would not add to the overall effectiveness of the board. It recommended that shareholders vote against the other Grok candidates and elect Mark Twidell.
It said Mr Bridell brings customer-facing experience as well as more than 30 years of experience in the international energy sector, most recently as director, energy programs at Telsa.
The company said it remains open to discussing appropriate board members with Grok or any other shareholder, noting it was unusual for a non-controlling shareholder (11.28 per cent) to nominate four candidates for election to the board. With only 10 directors allowed on the board, appointing the remaining Grok candidates could limit its ability to bring experts in other areas such as in ASX listing, M&A, digital and emerging technologies.
The AGM is scheduled on November 15.
Savers looking for a better rate turn to Macquarie, ING
Smaller banks are stepping up the battle to woo depositors by increasing their rates quicker than the cash rate, but the big banks’ share of the deposit market has shrunk since the Reserve Bank of Australia began its tightening cycle.
ING Australia became the latest bank to pass on more than the RBA’s latest quarter-percentage-point cash rate increase, as soaring funding costs in wholesale markets and more competition for deposit funding mean banks might start to decide whether to slow lending growth or sacrifice margins.
ING said it would increase its savings maximiser account deposit rate by 0.45 of a percentage point to 4.05 per cent per annum from October 11 for balances up to $100,000, a rate three times higher than it was six months ago, Rate City data shows.
The rate tops Macquarie’s introductory 4 per cent-per-annum savings deposit offer for new customers for the first four months on balances up to $250,000 and its ongoing rate, which increased by 0.45 of a percentage point to 3.2 per cent and its one-year term deposit rate of 3.8 per cent.
Canstar’s analysis of the latest monthly authorised deposit-taking institutions in APRA statistics showed the big four banks had gone backwards in terms of their share of household savings.
Cannon-Brookes to chair Sun Cable export venture
Software mogul Mike Cannon-Brookes has taken the role of inaugural chairman at the $35 billion Sun Cable power export venture in which he is a cornerstone investor in a move that adds momentum to the project as it heads into a critical funding phase.
Mr Cannon-Brookes said he was “thrilled” to play a part to lead Sun Cable, which is proposing to build a 4200-kilometre underwater power cable from Darwin through Indonesia to Singapore to export electricity generated from a massive solar farm in the Australian outback.
“Australia can and should be a global leader in clean energy exports,” said Mr Cannon-Brookes, who has been an investor in Sun Cable through his private firm Grok Ventures since November 2018.
“Sun Cable is at the forefront of making Australia a renewable energy superpower.”
Fellow billionaire Andrew Forrest is also backing the project, formally called the Asia-Australia Power Link, which will be one of the world’s biggest renewable energy projects. It will involve between 17 and 20 gigawatts of solar power generation backed up by between 36 and 42 gigawatt-hours of storage, with power to exported to Singapore where it will reduce dependence on imported LNG.
Hopes of Fed pivot fade ahead of crucial US jobs report
Risk assets faced renewed pressure after Federal Reserve officials hosed down hopes that it will replicate the Reserve Bank’s dovish pivot, reigniting concerns the US central bank will push the world’s largest economy into recession.
The RBA isolated itself from the global monetary pulse this week by slowing the pace of monetary tightening. This sparked optimism that other global central banks will follow suit, fuelling the Australian and US sharemarkets’ best two-day rally since 2020.
However, Wall Street retreated overnight as a trio of Fed officials sounded the alarm that more aggressive rate rises are on the horizon, and traders positioned for hotly anticipated US payrolls data to be released at 11.30pm tonight (AEST).
The S&P 500 dropped 1 per cent after surging 5.7 per cent earlier this week, while the Dow Jones Industrial Average fell 1 per cent, and the Nasdaq slipped 0.7 per cent. The US dollar surged nearly 1 per cent and treasury yields climbed across the board.
The S&P/ASX 200 opened 0.6 per cent lower at 6776.7 on Friday, and the Australian dollar was trading at US64.13¢.