AUS
NZ
UK
CA
USA
FRA
GER
ESP
ITA
NLD
PRT
SWE
GRC
IND
POL
BRA
ZAF
RUS
CHN
UAE
The ASX200 closed the day up by 0.3%, reaching 8,099.9 points, with notable movements across various sectors. The materials sector led the gains, rising 2.25%, followed by real estate at 1.02%, and energy with a modest increase of 0.84%.
Lithium and Battery Metals
Recent developments in the lithium market have generated significant interest. The recent closure of CATL’s Jianxiawo operations, while impactful, represents only a small portion of the global market, accounting for approximately 2%. Despite this, the closure has contributed to a rally in lithium stocks, including those with high short positions like Pilbara Minerals (ASX:PLS), which has been one of the top shorted stocks on the ASX.
The surge in lithium stocks has also been influenced by broader market speculation and short covering. As a result, the lithium sector is experiencing increased volatility and interest.
Gold Market Highlights
Gold prices have seen a significant boost, reaching record highs amid expectations of potential rate cuts in the US. The London Bullion Market Association (LBMA) gold prices closed at over US$2,545 per ounce, surpassing the previous high of approximately US$2,530 per ounce recorded on August 20
This rise has led to a substantial 5.2% increase in the ASX gold sub-index, reflecting strong gains for gold mining stocks.
Coal and Iron Ore
The coal and iron ore sectors have also experienced positive movements. Coal miners and iron ore companies saw substantial gains, driven by renewed efforts from China to meet its 5% GDP growth target. Fortescue Metals Group Limited (ASX:FMG) saw its shares rise by around 5%, supported by a slight increase in SGX iron ore prices to US$94.50 per tonne in recent days.
However, the iron ore market in China remains challenging. Steel demand has weakened significantly, highlighted by low mill profits and a drop in real estate starts to levels not seen since 2006. Chinese port inventories of iron ore have surged to a 29-month high, with steel inventories at major mills reaching a two-year high.
Westpac’s analysis indicates that iron ore prices might finish 2024 at US$85 per tonne. The decline in steel production and low steel mill profitability suggest ongoing weakness in demand, though potential stimulus measures could offer some relief.
Future Outlook
China's economic outlook remains uncertain, with recent data showing a potential fall in GDP growth below current forecasts. Analysts suggest that stimulus measures, including tax cuts and mortgage rate reductions, may be necessary to boost household income and economic activity. A stimulus package estimated at CNY 2 trillion might be required to support spending and stabilize the economy.
The ASX materials sector ended the day on a strong note with a 2.25% increase and a 4.17% gain for the week. The energy sector also saw gains of 0.84%. The market continues to navigate significant global and domestic economic shifts, with ongoing adjustments in response to both domestic policies and international developments.
