March 21, 2023
By Finance News Network | More Articles by Finance News Network
Stocks closed higher on Monday as traders grew hopeful that a crisis in the banking sector may be easing. The gains followed a forced takeover of Credit Suisse by UBS engineered by the Swiss government.
The instability in the financial sector over the past two weeks raises the stakes for the Federal Reserve’s interest rate decision on Wednesday.
As of Monday, there is about a 73 per cent chance of a quarter-point increase. The other 27 per cent is in the no-hike camp, anticipating that Chairman Jerome Powell may start to ease his aggressive tightening campaign that began in March 2022, in the face of the emerging financial contagion
The Dow Jones Industrial Average jumped 382.60 points, or 1.20 per cent, to close at 32,244.58. Meanwhile, the S&P 500 rose 0.89 per cent to end the session at 3,951.57. The Nasdaq Composite gained 0.39 per cent and closed at 11,675.54.
The Swiss government has come under fire from bondholders and international regulators for its handling of the $3.2bn rescue-takeover of Credit Suisse by UBS.
The two banks were forced together over the weekend by Swiss officials in a shotgun marriage that stabilised the teetering Credit Suisse but wiped out $17bn of its bonds, upending the normal priority of investors.
The decision to favour shareholders at the expense of bondholders sent a shockwave through already brittle markets on Monday morning, with investors in so-called additional tier 1 bonds fearing that they too could be sacrificed in a similar scenario at another bank.
US Regional banks rose on Monday, rebounding from big losses in the past week. Wall Street expects more action may be needed to restore confidence in the banking system after U.S. regulators backstopped SVB’s uninsured deposits and offered new funding for troubled banks one week ago.
However, First Republic, the lender at the centre of last week’s concerns, was down 27.3 per cent. After S&P cut its credit rating for the second time in a week, noting the $30B rescue deal has not solved the bank’s challenge
The gains were also mirrored in Europe, where the Euro Stoxx Banks index closed up 1.9 per cent, and UBS erased losses of more than 14 per cent to finish 1.3 per cent higher
Overnight, all S&P500 sectors finished higher. It has been a rough ride for the Financial Sector in recent weeks, however, in yesterday’s session the KBW Nasdaq Bank index increased by 1.7 per cent, with JPMorgan Chase and Morgan Stanley gaining 0.8 per cent and 1.9 per cent respectively.
Futures
The SPI futures are pointing to a 0.7 per cent gain.
Currency
One Australian dollar at 7:35 AM is buying 67.17 US cents..
Commodities
Iron ore futures are pointing to a 1.9 per cent fall.
Gold added 0.5 per cent. Silver gained 0.9 per cent. Copper rose 1.6 per cent and oil gained 1.2 per cent.
Figures around the globe
Across the Atlantic, European markets closed higher. London’s FTSE added 0.9 per cent, Frankfurt gained 1.1 per cent while Paris closed 1.3 per cent higher.
In Asian markets, Tokyo’s Nikkei lost 1.4 per cent, Hong Kong’s Hang Seng dropped 2.7 per cent while China’s Shanghai Composite closed 0.5 per cent lower.
Yesterday, the Australian sharemarket closed 1.4 per cent lower at 6,899.
Ex-dividends
Brisbane Broncos (ASX:BBL) is paying 1.5 cents fully franked
Credit Corp Group (ASX:CCP) is paying 23 cents fully franked
Cochlear (ASX:COH) is paying 155 cents 35 per cent franked
K & S Corporation (ASX:KSC) is paying 10 cents fully franked
Latitude Group (ASX:LFS) is paying 4 cents fully franked
Reece (ASX:REH) is paying 8 cents fully franked
Southern Cross Electrical Engineer (ASX:SXE) is paying 1 cent fully franked
Dividends payable
Altium (ASX:ALU)
Amcor PLC (ASX:AMC)
BlackWall (ASX:BWF)
Challenger (ASX:CGF)
Computershare (ASX:CPU)
Dalrymple Bay Infrastructure (ASX:DBI)
Hansen Technologies (ASX:HSN)
HiTech Group Australia (ASX:HIT)
MyState (ASX:MYS)
REA Group (ASX:REA)
Tabcorp Holdings (ASX:TAH)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
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Magnis Energy Technologies (MNS.ASX) – MNS is planning an anode active facility in the US and recently announced a binding, yet conditional, contract for the supply of anode active with Tesla. The contract is for a minimum 17.5kt/year with an option to purchase another 17.5t/year. Conditions precedent carry a tight development timeframe, with first production scheduled for February 2025. Site selection is underway and co-locating with an OEM on a brownfields site makes sense. Long lead items have been ordered and detailed engineering and design is expected to commence soon.
SMSFBrokerFinancial Adviser
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TerraCom released their operating results for the December quarter FY2023 with operating metrics being in line with our forecasts.
Unseasonal rains in both Australia and South Africa contributed to operational and logistical issues across all mines, however guidance for annual production at Blair Athol is unaffected and highlights the quality of TerraCom’s skills in operational management.
We continue to like the stable operating metrics around the company’s Australian operations and see potential for the South African operations to benefit from increased management focus given the rationalisation of operations following the closure of the Ubuntu mine.
Corporate Connects overall financials remain unchanged as does our target price of $1.35 share. We maintain our forecast for a fully franked quarterly dividend of 7.5c/share to be paid in the March and June quarters of FY2023.
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NOVONIX (ASX:NVX) – is scaling a synthetic anode materials plant in the US and piloting nickel rich cathode material in Canada. Why? China is dominant and growing – 100% of global natural anode and 68% of synthetic anode is refined in China. In short, China controls the global midstream battery chain by controlling 60% of chemical refining, 87% of anode manufacturing, 61% of cathode manufacturing and 73% of battery manufacturing. It is global battery supply and price domination at scale.
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We initiate coverage on Tamboran Resources with a 12-month target price of $1.10 – representing 520% upside from the current share price. The company provides investors with a pure exposure to the development of the world class unconventional gas resource located in the Beetaloo Sub basin in Australia’s Northern Territory. The drilling of 2 wells before the end of 2022, Amungee 2H and 3H, will provide significant visibility on the commerciality of the proposed EP 98 Pilot Development – both wells are fully funded with the company having a current cash balance of ~A$130million.
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RareX Limited is an Australian Rare Earths company that has set its sights on becoming one of the largest light rare earth elements (LREEs) producers in Australia. The company’s flagship project is the Cummins Range deposit, a carbonatite deposit with a current 18.1Mt resource at 1.15% TREO (0.5% cut-off grade) that has significant potential for expansion.
Recent exploration results have confirmed high-grade extensions at depth and along strike with an additional 30,000m drilling program commencing in the second quarter of FY2022. The companies scoping study suggests upside from phosphate and economic viability over the Life of Mine (LOM).
We initiate on RareX Ltd with a A$0.12 price target – risked at 25%
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This report looks at the results of a collaborative study Antisense undertook which looked at the largest protein expression database in Long COVID-19 patients who experienced neurologic symptoms well after the primary or acute SARS-CoV-2 infection was considered over (Groups 1 & 2, with 48 subjects Group 2 comprising a single patient from a different clinical site). The symptoms and others experienced by such patients result in a highly significant amount of illness, possibly more than all primary SARS-CoV-2 infections i.e COVID-19.
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Kazia Therapeutics (KZA) announced yesterday morning that paxalisib did not meet the threshold to move into stage 2 of the GBM AGILE clinical trial (NCT03970447). The study was an adaptive trial designed to assess the potential of new therapeutics to treat the highly aggressive brain cancer glioblastoma (GBM) in a cost-effective manner. Demonstrating efficacy in GBM is an extremely high hurdle as shown by the fact that there is only one approved drug for the disease, temozolomide, and it is only effective in 1/3 of patients.
Given the high nature of the hurdle, in our original initiating coverage report on KZA, we only gave paxalisib a small chance of returning a positive result from the overall study. That is the nature of drug development with one group estimating only 6% to 7% of new chemical entities that commence clinical trials reach launch (Dowden & Munro (2019) Nat Rev Drug Discov). The small percentage that do make it to launch, however, more than make up for the cash spent on those that don’t.
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Lake Resources (LKE. ASX) – LKE has signed two non-binding MOU’s in the space of 10 days. Ford Company (Ford) has signed an MOU for ~25,000t/year and last week Hanwa, a Japanese commodity trader signed a MOU for up to 25,000t/year. Subject to execution, this is an amazing feat as Ford and Hanwa are prepared to enter into longer-term strategic partnerships with LKE. Commercial negotiations are still ongoing but are expected, especially if Ford & Hanwa inject new equity into LKE, to further de-risk the project financing & thus ensure LKE and Kachi are fully funded.
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TNG Ltd is an ASX-listed technology owner and developer of the world-class Mount Peake near-surface vanadiferous titanomagnetite deposit. To unlock value, TNG will concentrate ore from its central Northern Territory mine for processing through its patented TIVAN® process produce three premium quality revenue streams: hi-purity vanadium pentoxide (V2O5) for steel alloys and Vanadium Redox Flow batteries, a quality titanium pigment for paints and a premium steel input with >64%Fe iron ore fines.
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Two recent gravity surveys have considerably exceeded expectations and revealed potential for extensions to the existing MRE at Lake Throssell, plus a material growth opportunity at Lake Yeo. This reinforces the potential for a multi-decade, Tier-1 SOP production hub based around Lake Throssell.
TMG is currently completing work towards the PFS due early 2023, including drilling to start in Q3 2022, evaporation trials and permitting activities. Results from these programs will support the PFS and any future resource upgrade.
Benchmark SOP prices have risen to ~US$940/t due to recent geopolitical developments. The Oct 2021 Scoping Study assumed a SOP price of US$550/t and contained a sensitivity analysis showing every 10% increase in price drives a +$144m increase in the project NPV of $364m. The c.70% increase above the Scoping Study thus implies a project NPV of ~$1.4bn.
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Despite the lower realised oil and gas price, which fell by 5.4% and 19.7% respectively in August, Calima managed to show improvement in its key business metrics.
We expect higher production in November due to the contribution by the new Thorsby wells which will be drilled in August/September which will see Calima meet its 2021 production guidance of 4,500 boe/d.
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WT Financial Group Limited (WTL) is a growing diversified financial services company, founded in 2010 and listed on the Australian Stock Exchange (ASX) in 2015. Its advice and product offerings are delivered primarily through a group of independent financial advisers operating as authorised representatives of WTL under its Wealth Today Pty Ltd (Wealth Today) and Sentry Group Pty Ltd (Sentry Group) dealer group operations. It has around 275 advisers across more than 200 financial advice practices Australia-wide. It also operates a direct-to-consumer operation under its Spring Financial Group brand.
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In May 2021, Corporate Connect analyst Marc Sinatra published a comprehensive research report on ASX-listed biotech Immutep Ltd (ASX: IMM). So impressed was he with IMM that Corporate Connect felt it imperative that a follow-up report be released placing a valuation on the company, because the market was not seeing the vast potential of eftilagimod alpha (efti).
This follow-up report has been released today. Using comparables, after adding cash back to their EV estimate and dividing by the total number of issued shares, Corporate Connect now places the fair value of an Immutep share at $A2.20.
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PayGroup (PYG) delivers multi-country BPO services and cloud SaaS HCM solutions, assisting companies to manage employees in multiple, complex jurisdictions. The company has many growth opportunities, including new clients, new jurisdictions, new products, partner expansion, and new revenue sources. PYG’s scalable business model allows operating leverage and with savings from in-housing third party technology, support margin expansion.
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OpenLearning (OLL) is a higher education technology company that operates a scalable online learning platform through a software-as-a-service (SaaS) business model and provides a global marketplace of high quality courses for learners of all levels. Its primary customers are education providers based in Australia and South-East Asia (primarily Malaysia). OLL started operations in Australia in 2012 and expanded to Malaysia in 2015, Singapore in 2018, and recently also Indonesia.
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