What's Affecting Markets Today
Liontown Reviews WA Lithium Project Expansion Due to Falling Prices
Liontown Resources is re-evaluating the expansion of its Kathleen Valley lithium project in WA, considering the recent dip in spodumene prices. The company is assessing the feasibility of delaying its planned 4 million tonne per annum underground development and finding ways to reduce costs. Despite this, Liontown is still on track for its first production by mid-year and remains optimistic about the long-term prospects of the lithium market and Kathleen Valley’s potential as a leading, long-life producer.
Goldman Holds to March Rate Cut by the Fed
Goldman Sachs maintains its prediction of a March rate cut by the Federal Reserve, despite a lower 48% probability indicated by the CME FedWatch Tool. Goldman cites recent favourable global core inflation rates and the US’s lead in disinflation. They anticipate the Fed to initiate rate cuts starting in March, with successive cuts throughout 2024, totalling five for the year. Goldman also expects similar actions from the European Central Bank and the Bank of England, projecting 150 basis point cuts each in 2024. However, they predict China’s growth will continue to slow due to ongoing challenges in housing, debt, and demographics.
ASX Stocks
ASX 200 - 7467.8 (+0.6%)
Key Highlights:
The Australian sharemarket experienced gains on Monday, following a strong US market performance, yet concerns from local miners about declining metal prices tempered the rise. The S&P/ASX 200 increased by 0.8%, with notable growth in tech stocks like Life360, Block, and Xero, as well as consumer and real estate sectors. However, materials and utilities sectors saw declines.
Mining companies faced challenges due to dropping prices in metals such as copper, nickel, and lithium. This led to a review of exploration plans and the closure of some mines, including Andrew Forrest’s West Australian nickel mines. Major miners like BHP Group and Fortescue Metals showed little movement, while Rio Tinto dropped slightly. Lithium stocks, including Sayona Mining, Mineral Resources, and Pilbara Minerals, faced significant losses.
Banks, on the other hand, performed well, with ANZ, Commonwealth Bank, National Australia Bank, and Westpac all seeing increases. Morningstar anticipates growth in banks’ net interest income and cash profits despite rising bad debts.
Internationally, the People’s Bank of China kept its lending rates unchanged, and Fed fund futures predict a 50% chance of a US Federal Reserve rate cut in March. The Australian dollar edged up slightly, while crude oil prices and iron ore futures declined. Noteworthy stock movements included South32’s drop after reducing copper output guidance, Lynas Rare Earths’ fall post-production shutdown, and Chalice Mining’s cost-cutting measures. Liontown Resources reviewed its lithium project expansion due to price concerns, while Appen’s stock plummeted after losing a Google contract. Zip saw a jump in shares after announcing a return to profitability, and Perseus Mining’s planned bid for OreCorp boosted its shares. Burns treatment specialist PolyNovo also saw gains after reporting record sales.
Leaders
ZIP – ZIP Co Ltd (+14.96%)
PNV – Polynovo Ltd (+9.78%)
A2M – The a2 Milk Company Ltd (+6.02%)
OCL – Objective Corporation Ltd (+5.31%)
360 – LIFE360 Inc (+4.78%)
Laggards
LTR – Liontown Resources Ltd (-21.34%)
COE – Cooper Energy Ltd (-20.69%)
WC8 – Wildcat Resources Ltd (-15.00%)
LRS – Latin Resources Ltd (-13.75%)
TBN – Tamboran Res. Corporation (-10.45%)