Evening Report: 20 July, 2022 – ShareCafe

by Paul Sanger


The Australian sharemarket surged higher today, posting its biggest single-day gain in over three weeks. The S&P/ASX 200 was a sea of green with just a few companies not posting gains. At the closing bell the S&P/ASX 200 was 1.65 per cent or 109.60 points higher at 6759.20.

The battered and bruised tech sector led the charge, closing 3.77 per cent higher, outperforming a 3 per cent jump on the tech-heavy Nasdaq 100 index overnight following a series of upbeat earnings reports.

A rally in iron ore futures sees Australia’s major miners build on earlier gains in afternoon trade. Singapore iron ore futures for July contract are slightly higher at $US104 on Wednesday, while August futures are up 3.4 per cent to $US100.60. September futures are also up 3.4 per cent to $US100.80.

Lithium stocks were also strong across the board as the demand/supply dynamic continues to play out despite volatile equity markets. Data from the Shanghai Metals Market showed that demand for battery-grade lithium carbonate increased during July as downstream battery factories and auto manufacturers increased their operating rates. At the same time, battery producers reported lower inventory readings as raw material purchases were not able to keep up with battery output.

Best and worst performers

The best-performing sector was Information Technology, up 3.77 per cent. The sector with the fewest gains is Consumer Staples, up 0.36 per cent.

The best-performing stock in the S&P/ASX 200 was Megaport (ASX:MP1), closing 23.03 per cent higher at $7.96. It was followed by shares in Brainchip (ASX:BRN) and Zip Co (ASX:ZIP).

The worst-performing stock in the S&P/ASX 200 was NIB Holdings (ASX:NHF), closing 3.19 per cent lower at $7.28. It was followed by shares in Pendal Group (ASX:PDL) and Perseus Mining (ASX:PRU).

Overseas markets

Asian equities are trading higher on Wednesday. A strong handover from the US was the cue for Asian markets to surge today, Japan closing on its highs. Greater China was strong, led by Hong Kong tech listings post Didi news and hopes the sector can move on from regulator clampdown. South Korea and Taiwan are higher, Southeast Asia stronger,and India very strong at the open.

US and Europe are eying stronger openings, with the US dollar soft again for a third day. Treasury yields are mostly higher.

Commodities and currencies

Crude blends are lower, with WTI below $100 again.

Precious metals are down, iron ore slightly higher but other commodities lower.

Cryptocurrencies bid well again.

Gold is trading at US$1707.29 an ounce.

Iron ore is 4.4 per cent lower at US$96.45 a tonne.

Iron ore futures are pointing to a fall of 0.2 per cent.

Light crude is trading $1.10 lower at US$99.31 a barrel.

One Australian dollar is buying 69.08 US cents.

Economic news

The China Covid situation remains volatile after daily infections hit their highest level since late May. Traders are also weighing the potential for policy support, including additional steps to alleviate pressure on property developers.

There is nothing particularly incremental from RBA Governor Lowe, who noted higher rates will help moderate demand growth amid capacity pressures. His speech follows hawkish takeaways from the July RBA minutes, which noted cash rate is well below the lower range of neutral rate estimates. Market forecasts for terminal cash rate were dialled up following the minutes, while futures are pricing in consecutive 50 bp rate hikes in August and September.

Company news

Euro Manganese (ASX:EMN) announced early today that it has become a member of the Global Battery Alliance (GBA) , a partnership of leading organisations from across the battery value chain, which includes governments, academics, and NGOs who have mobilised to ensure that battery production not only supports green energy, but also safeguards human rights and promotes environmental sustainability. EMN is the first high-purity manganese company to join the GBA. Shares in EMN closed 10.34 per cent higher at 32c.

Silex Systems (ASX:SLX) announced the completion of the construction of a pilot demonstration facility, which is being deployed to verify commercial production capability for high-purity “Zero-Spin Silicon” — a key enabling material for the emerging silicon quantum computing industry. The construction of the pilot demonstration facility is the seventh milestone in the ZS-Si Project, and is being undertaken in conjunction with project partners Silicon Quantum Computing Pty Ltd (SQC) and UNSW Sydney (UNSW). As part of this milestone, a pilot-scale process reactor and associated gas handling system were constructed. Shares in SLX closed 12.37 per cent higher at $3.36.

Centaurus Metals (ASX:CTM) reported outstanding new drill results from ongoing resource growth and development drilling at its 100 per cent-owned Jaguar Nickel Sulphide Project in the Carajás Mineral Province of northern Brazil. The results are expected to contribute to an increase in the global Mineral Resource Estimate (MRE), due for delivery at the end of September, as well as to upgrade more of the Jaguar MRE into the higher-confidence measured and indicated categories in advance of ore reserve estimation as part of the DFS. Shares in CTM closed up 4.69 per cent at $1.005.

Smartpay (ASX:SMP) released a strong trading update following the completion of the first quarter to 30 June 2022 of the 2023 financial year. Increasing their investment in marketing and sales paid off and resulted in record months for lead generation and delivered accelerated customer acquisition in the first quarter of FY23, with over 1200 new transacting terminals added to the end of June. Shares in Smartpay closed 18.42 per cent higher at 67.5c.

Lithium producer Allkem (ASX:AKE) says it earned record revenue of US$337 million in the June quarter on a gross operating cash margin of 67 per cent. It achieved an average lithium price of US$41,033 a tonne free on board (FOB) during the June quarter. Its Mt Cattlin mine in Western Australia produced a record 193,663 dry metric tonnes of spodumene concentrate in FY 2022, while the Olaroz lithium brine facility in Argentina produced 12,863 tonnes of lithium carbonate in FY 2022. Shares in Allkem closed up 0.92 per cent at $9.89.

Telco infrastructure firm Megaport (ASX:MP1) has reported fourth quarter revenue of $30.6 million, a 10 per cent improvement on Q3. The company also reported normalised earnings before interest, tax, depreciation and amortisation (EBITDA) of $1 million in Q4 for the first time, thanks to two new markets, Canada and Japan, becoming profitable and ahead of schedule. That’s after backing out of equity-settled employee-related costs, foreign exchange gains and losses on disposal of property, plant and equipment, and other non-recurring expenses, it said. Normalised EBITDA for the year to date is -$10.2 million. Shares in Megaport closed up 23.03 per cent at $7.96.

Fintech and lender Plenti Group’s (ASX:PLT) posted a 90 per cent jump in its loan portfolio to $1.44bn at June 30 compared to the prior corresponding period. The portfolio grew 11 per cent on the prior quarter. It posted strong quarterly loan originations of $289m, up 34 per cent on the prior period. Quarterly revenue totalled $30.5m. Shares in PLT closed up 3.17 per cent at 66c.

Beach Energy (ASX:BPT) posted its best quarterly earnings in more than three years as a global energy crunch fuelled demand, buoying hopes that the troubled energy company has turned a corner. BPT shares closed up 2.82 per cent at $1.825.


The Dow Jones futures are pointing to a rise of 114 points.

The S&P 500 futures are pointing to a rise of 16 points.

The Nasdaq futures are pointing to a rise of 50 points.

The SPI futures are pointing to a rise of 110 points when the market next opens.

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