ASX up 1.3% at noon as UBS makes large forecasts

According to UBS analysts, peak food inflation at Australian supermarkets Coles (ASX:COL) and Woolworths (ASX:WOW) likely occurred during the December 2022 Christmas shopping period, reaching 9.4 per cent.

They expect that the moderation in food inflation will be mainly driven by fresh products. However, they also suggest that cost pressures will remain in dry grocery items, such as domestic supply chain, labour, and specific product inputs, which is expected to continue for the remainder of FY23.

Next, UBS commented on the lithium market, outlining UBS predicts that new lithium carbonate equivalent supply from China and Latin America could lead to almost double the total supply between 2022 and 2025, with around 2 million tonnes of LCE online by 2025.

Despite the recent collapse in lithium prices, UBS has maintained buy ratings on Allkem (ASX:AKE), Mineral Resources (ASX:MIN), IGO (ASX:IGO), Liontown Resources (ASX:LTR) and Wesfarmers (ASX:WES), with a neutral rating on Pilbara Minerals (ASX:PLS), suggesting that the lithium prices may have reached the bottom.

At noon, the S&P/ASX 200 is 1.3 per cent higher at 6,986.80.

The SPI futures are pointing to a rise of 85 points.

Best and worst performers

The best-performing sector is Energy, up 2.1 per cent. The worst-performing sector is Utilities, down 0.31 per cent.

The best-performing large cap is Whitehaven Coal (ASX:WHC), trading 5.65 per cent higher at $6.73. It is followed by shares in Pro Medicus (ASX:PME) and Yancoal Australia (ASX:YAL).

The worst-performing large cap is Northern Star Resources (ASX:NST), trading 1.99 per cent lower at $11.59. It is followed by shares in Meridian Energy (ASX:MEZ) and Cleanaway Waste Management (ASX:CWY).

Asian markets

Asia-Pacific markets are set to rise after markets on Wall Street staged a relief rally on the hopes that the banking crisis is easing, following the $3.2 billion takeover of Swiss bank Credit Suisse by rival UBS.

US Federal Reserve’s Federal Open Market Committee meeting kicks off later today stateside, with the central bank expected to approve a quarter-percentage-point interest rate increase, according to market pricing and many Wall Street experts.

South Korea’s Kospi was up 0.73 per cent and the Kosdaq gained 0.78 per cent. Markets in Japan are closed for a holiday. Stocks in Hong Kong are poised to rise, with Hang Seng futures at 19,166 – compared to the index’s last close at 19,000.

Company news

Besra Gold (ASX:BEZ) has announced an up to US$300m for a non-binding drawdown offtake funding facility term sheet, signed with major shareholder Quantum Metal Recovery, to facilitate development of the 3 million ounce Bau Gold Project. Besra’s Chairwoman, Jocelyn Bennett commented: “We [now] plan to commence an update of the 2013 feasibility study and accelerate our plans to begin pilot production in the calendar year 2023.” Shares are trading 80 per cent higher at 7.2 cents

Mincor Resources (ASX:MCR) has received a $1.40 cash takeover offer from Wyloo Consolidated Investments, an investment vehicle of Australian billionaire Twiggy Forest. Forest currently owns 19.87 per cent of Mincor and this will help his push into the nickel and the EV battery minerals industry. Shares are trading 41.6 per cent higher at $1.47.

MGC Pharmaceuticals (ASX:MXC) announced that ArtemiC™, their proprietary clinically tested for COVID 19 treatment, has been listed as over-the-counter status on the National Drug Code Database of the US FDA. In response, Roby Zomer, CEO and Managing Director of MGC Pharmaceuticals, commented: “[This] provides significant access to the largest healthcare market in the world and stands as a major milestone MGC’s growth progression.” Shares are trading 42.9 per cent higher at 1 cent.

Renegade Exploration (ASX:RNX) has announced that their drilling has hit large copper sulphide zones at their Mongoose Project in Queensland. In response, Director, Mr Robert Kirtlan, said, “Within two months of assuming control of Mongoose we have completed a maiden RC program and it has all the hallmarks of being very successful.” Shares are trading 40 per cent higher at 1.4 cents.

Commodities and the dollar

Gold is trading at US$1782.70 an ounce.
Iron ore is 4.2 per cent lower at US$126.50 a tonne.
Iron ore futures are pointing to a 1.9 per cent fall.
One Australian dollar is buying 67.04 US cents.

Peter Milios

Peter Milios is a recent graduate from the University of Technology – majoring in Finance and Accounting. Peter is currently working under equity research analyst Di Brookman for Corporate Connect Research.

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