ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (2024)

The ASX 200 jumped 0.7 per cent to a new record close as another Chinese economic stimulus package provided a strong tailwind for the miners.

However, manufacturing data out of China pointed to ongoing softness in the economy and a key federal government agency cut price forecasts again for mineral exports.

Look back at the day's events.

Disclaimer: this blog is not intended as investment advice.

Key Events

  1. ASX 200 jumps 0.7% to nail a new record close

  2. Iron ore futures soaring, up 10% to $US116/tonne

  3. Mining and energy revenues revised down as export prices fall

Live updates

Pinned

Market snapshot

By Stephen Letts

  • ASX 200: +0.7% to 8,270 points (live values below)
  • Australian dollar: +0.4% to 69.33 US cents
  • Nikkei: -4.9% to 37,871 points
  • Hang Seng: +3.9% to 21,426 points
  • Shanghai: +8.1% to 4,005 points
  • S&P 500 (Friday): -0.1% to 5,738 points
  • Nasdaq (Friday): -0.5% to 20,009 points
  • FTSE (Friday): +0.4% at 8,321 points
  • EuroStoxx (Friday): +0.7% to 523 points
  • Spot gold: flat at $US2,657/ounce
  • Brent crude: +1.6% at $US73.10/barrel
  • Iron ore (Friday): +3.6% to $US102.10/tonne
  • Bitcoin: -1.8% to $US64,646

Prices current at around 4:30pm AEST

Live updates on major ASX indices:

Goodbye and thanks for your company

By Stephen Letts

OK, that's it for today, time to put the blog to bed.

But don't forget Kirsten and the team on The Business will be back on air on ABC News at 8:45 and after the Late News on ABC TV.

ABC Online is always only a few clicks away too if you need an up-to-minute news and analysis fix.

"Downtown" Dan Ziffer will be firing up the blog again tomorrow.

On The Business tonight

By Stephen Letts

Here's what's coming up on The Business tonight with Kirsten Aiken:

Kirsten speaks with Treasurer Jim Chalmers about China's big stimulus package, its economy, what it means for iron ore exports, and would there be any circumstances where Australia would consider banning software in EV's ... oh, and let's not forget the current debate about negative gearing.

Kirsten also catches up withTribeca's Jun Bei Liu on the ASX's China rally today and day on the market and whether there's any nervousness on market over the growing conflict in Middle East

Catch The Business on ABC News at 8:45pm, after the late news on ABC TV, and anytime on ABC iview.

Key Event

ASX 200 jumps 0.7% to nail a new record close

By Stephen Letts

The ASX is off to a rollicking start to the week, up 0.7% hitting a new record close of 8,270 points.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (1)

The sentiment was boosted by China's announcement of a new stimulus package on Friday, putting a tailwind behind the miners and energy stocks.

Fortescue (+2.9%), BHP (+2.7%) and Rio Tinto (+2.2%) made strong starts to the week after iron ore futures jumped around 10% on news of the stimulus package.

LNG producers Woodside (+3.5%), Santos (+2.6%) and the small Brazilian focussed Karoon Energy (+7.2%) also benefited.

The big banks were a mixed bag ranging from NAB (+1.1%) to Westpac (-0.3%).

The supermarket chains were mixed - Coles (+0.1%) and Woolworths (-0.3%).

Telstra fell 1.0%.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (2)

The ASX 200's biggest gainer was Friday's biggest loser, Star Entertainment, up 18% or 4.5 cents - the classic dead cat bounce after Friday's capitulation where it shed 20 cents or 44% in value.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (3)

Gold and uranium sectors struggled, with gold miner Vault Minerals down 5.8% and uranium miner Deep Yellow falling 4.5%.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (4)

The surge in demand for resources saw the Australian dollar tick up 0.4% to 69.33 US cents.

Markets across the region were all over the shop.

The Shanghai Composite has accelerated across the day and is up more than 8%, the Hang Seng in Hong Kong is up 4.1% while Japan's Nikkei fell 5% in the aftermath of announcing a new Prime Minister.

Wall Street looks like having a quiet opening to the week with the S&P 500 futures up barely 0.1%.

Meanwhile in Japan ...

By Stephen Letts

While the ASX is enjoying a gain that looks like being around 0.5% today and China's Shanghai Composite is up more than 6% (even after some pretty ordinary manufacturing data), the wheels have fallen off in Japan.

The Nikkei is down 5% with only 11 of the index's 225 components making any headway – everything else is down.

As Reuters reported the slump follows some "dovish" comments from new Prime Minister Shigeru Ishiba.

"The Japanese yen paused its recent rally to trade around 142.3 per dollar following the results of the ruling Liberal Democratic Party election," Reuters reported.

The former defence minister Mr Ishiba, had been seen as less dovish than his rival Sanae Takaichi, before he won the leadership of Japan's ruling party, as the next prime minister.

The market appears to have changed its mind on that now.

Meanwhile, data released today showed that Japanese retail sales grew more than expected in August, while industrial production came in weaker-than-anticipated.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (5)

Key Event

Iron ore futures soaring, up 10% to $US116/tonne

By Stephen Letts

You can get some sense of the momentum behind today's boisterous rise among the big iron ore producers by looking at what's happening on futures markets.

Both Chinese (Dalian) and Singaporean futures markets are on a tear.

Dalian iron ore futures have jumped10% since late last week when the Chinese government unleashed a fresh dose of stimulus into its ailing economy, with the current futures contract price of 815 yuan equating to around $US116/tonne.

But the rally even predates the stimulus package.

Over two weeks Dalian futures have gained 20%.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (6)

Key Event

Mining and energy revenues revised down as export prices fall

By Stephen Letts

Amid the booming day resource companies are enjoying, there's been a sobering release from the forecasting arm of Federal Government's Department of Industry, Science and Resources.

The Resources and Energy Quarterly forecasts export earnings will decline by around 10% in 2024–25, to $372 billion from $415 billion in 2023–24.

That's a step down from the June bulletin.

"The fall mainly reflects slightly larger forecast declines in bulk commodity prices," the REQ notes.

"The earnings falls of the past 2 years will lessen in 2025/26 — with exports forecast at $354 billion."

Australia's largest export iron ore has been particularly hard hit by the slowdown in the Chinese property sector and prices are down about a third this year.

The country forecasts iron ore export revenue to fall to $99 billion in 2026 from $138 billion last year.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (7)

The main changes seen since the June 2024 REQ include:

  • The iron ore price recently fell below US$100 a tonne, on the back of weak Chinese demand.
  • Weakness in metallurgical coal prices as weakness in the steel sector impacts on metallurgical coal demand.
  • Base metals prices have generally declined, on the back of weakness in the Chinese property sector.
  • The prices of lithium and nickel remain weak due to market surpluses continue to build inventories.
  • The gold price has hit new record highs since the June 2024 REQ, driven by expectations of interest rate declines, the lower US dollar, central bank buying and Chinese household demand for alternative investments — amidst property and share market weakness

Update

By Stephen Letts

QANTAS says no delays? Tell that to the people stranded at Hobart airport last night for more than 3 hours due to "a delay caused by engineering"

- Piers

Thanks Piers, it seems not everyone is buying the Qantas "no delays, no cancellations" line. If you'd had problems with Qantas either delaying or cancelling your flight, let us know

- Stephen Letts

Key Event

Australians are borrowing more and saving more

By Stephen Letts

The RBA's latest release of financial aggregates tells an interesting tale about our current borrowing and saving habits.

In August, private sector credit grew by 0.5% — much as expected, but perhaps unexpectedly it was business borrowing (+0.7%) where the growth was centred, while monthly housing credit eased to 0.4% growth from 0.5% growth in July.

As J.P. Morgan's Jack Stinson pointed out, "The moderation in housing credit growth entirely reflected a fall in owner-occupier growth, investor credit growth picked up in unrounded terms.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (8)

On the deposit side of the ledger, Australian households are continuing to squirrel away spare cash.

Household deposits rose $11.5 billion in August, following July's outsized $30.8 billion increase.

The consensus view is it appears the recent tax cuts are mostly being saved, for time being at least.

"Drawing inferences on changes in deposits and consumer spending is fraught, and no doubt the shift in July and August payments reflects an earlier tilt to tax refunds, as well as perhaps cash flow effects from government subsidies and tax cuts," Tapas Strickland, NAB's head of market economics said.

"We will know more on the consumer spending front tomorrow with Retail Sales for August," he noted.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (9)

UBS economist George Tharenou said the result for the RBA is mixed.

"Private credit growth has picked up to a relatively solid pace," Mr Tharenou said.

"Meanwhile, private deposits also lifted, perhaps reflecting that consumers are still yet to spend the household tax cuts.

"Elsewhere, the Australian Government budget outcome showed a larger-than-expected surplus.

"However, looking ahead, key for the economy and inflation will be the pace of Government spending, and if the tax cuts end up being spent.

Mr Tharenou maintained UBS still expected the RBA to start to cut the cash rate by 25bps in Feb-25.

Market snapshot

By Stephen Letts

  • ASX 200: +0.8% to 8,277 points (live values below)
  • Australian dollar: +0.2% 69.15 US cents
  • Nikkei: -4.5% to 38,024 points
  • Hang Seng: +1.6% to 20,968 points
  • Shanghai: +4.1% to 3,854 points
  • S&P 500 (Friday): -0.1% to 5,738 points
  • Nasdaq (Friday): -0.5% to 20,009 points
  • FTSE (Friday): +0.4% at 8,321 points
  • EuroStoxx (Friday): +0.7% to 523 points
  • Spot gold: -0.2% to $US2,653/ounce
  • Brent crude: +0.3% at $US72.22/barrel
  • Iron ore (Friday): +3.6% to $US102.10/tonne
  • Bitcoin: -2.0% to $US64,521

Prices current at around 1:00pm AEST

Live updates on major ASX indices:

ABC Embed

https://www.abc.net.au/news/business/embed/quote-list?abcnewsembedheight=1000

Key Event

ASX up 0.8% boosted by miners and energy, on target for new record close

By Stephen Letts

The ASX is off to a rollicking start to the week, up 0.8% heading into the afternoon session and likely hit a new record close.

The sentiment has been boosted by China's announcement of a new stimulus package on Friday, putting a tailwind behind the miners and energy stocks.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (10)

Fortescue (+3.3%), BHP (+2.4%) and Rio Tinto (+2.2%) have made strong starts to the week.

Smaller players Mineral Resources (+4.2%) and the mineral sands outfit Iluka (+1.5%) have also benefited, as have LNG producers Woodside (+2.9%) and Santos (+2.3%).

The big banks have all made gains led by NAB (+1.4%).

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (11)

The supermarket chains are mixed - Coles (+0.1%) and Woolworths (-0.3%).

Telstra is down 0.9%.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (12)

The biggest gainer of the day so far is Friday's biggest loser, Star Entertainment, up 20% or 6 cents - the classic dead cat bounce after Friday's capitulation where it shed 20 cents or 44% in value.

Gold and uranium are couple of the sectors struggling so far, with West African Resources down 4.1% and Deep Yellow down 5.2%.

The surge in demand for resources has seen the Australian dollar tick up to 69.21 US cents.

Markets across the region are very mixed, ranging from Shanghai's 4.1% gain to Japan's Nikkei down 4.5%.

Key Event

Treasurer Jim Chalmers has just spoken on reopening a dialogue with China

By Stephen Letts

China is a big theme of the day with Friday's stimulus measures putting a rocket under Australia's resources sector (the Shanghai composite index is up more than 4% today as well), while the latest manufacturing PMI shows China's industrial heartland is struggling.

Treasurer Jim Chalmers jumped in on the theme discussing the importance of reopening a dialogue with Beijing.

Market snapshot

By Stephen Letts

  • ASX 200: +0.7% to 8,271 points (live values below)
  • Australian dollar: +0.2% 69.15 US cents
  • Nikkei: -4.5% to 38,024 points
  • Hang Seng: +1.6% to 20,968 points
  • Shanghai: +4.1% to 3,854 points
  • S&P 500 (Friday): -0.1% to 5,738 points
  • Nasdaq (Friday): -0.5% to 20,009 points
  • FTSE (Friday): +0.4% at 8,321 points
  • EuroStoxx (Friday): +0.7% to 523 points
  • Spot gold: -0.2% to $US2,653/ounce
  • Brent crude: +0.3% at $US72.22/barrel
  • Iron ore (Friday): +3.6% to $US102.10/tonne
  • Bitcoin: -2.0% to $US64,521

Prices current at around 12:30pm AEST

Live updates on major ASX indices:

China's manufacturing sector goes into reverse as new orders dry up

By Stephen Letts

China's industrial heartland is continuing to struggle with the latest survey showing manufacturing was heading back into contraction.

In a nutshell, the retreat was triggered by a renewed downturn in new orders, including exports which fell again.

New orders are now declining at the fastest pace in two years.

The Caixin Purchasing Managers' Index showed operating conditions in China's manufacturing sector deteriorated in September after improving during August.

The composite index fell from 50.4 in August to 49.3 in September, where 50 is the neutral mark defining expansion from contraction.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (13)

"Supply edged up while demand shrank in September," Dr Wang Zhe, Senior Economist at Caixin Insight said.

"The market was characterized by diminished demand coupled with fierce competition."

That has led to falling optimism, shrinking employment and a drop in input prices as noted by the survey's participants.

"Overseas demand came under pressure while employment deteriorated," Dr Wang said.

"Deliveries were delayed, manufacturer inventories grew and deflationary pressure increased.

"Business confidence fell to its lowest level in recent years.

Dr Wang said across the board, the latest macroeconomic data have fallen short of market expectations.

"The issue of insufficient effective domestic demand remains prominent, with significant pressure on employment and weak optimism constraining people's willingness and ability to spend."

Dr Wang said the latest data meant it would be a challenge for China to meet it GDP growth target of 5% for the year.

Key Event

Labour productivity remains stagnant: Productivity Commission

By Stephen Letts

The Productivity Commission's latest check of the productivity pulse of the nation isn't great, but it nonetheless marks a slight uptick from the COVID-19 pandemic distortions.

The commission found labour productivity fell by 0.8% across the economy in the June quarter, but rose by a modest 0.5% over the year to June 2024.

"This marks a return to the weak productivity growth trend of the five years leading up to the COVID-19 pandemic," the commission's report noted.

"During the pandemic, aggregate productivity rose but then fell as restrictions were eased," the Commission's Deputy Chair Dr Alex Robson said.

"This bubble has now well and truly burst, and our productivity level remains at about its 2015–2019 average," he said.

Labour productivity as defined by the RBA is output per worker or per hour worked.

Factors that can affect labour productivity include workers' skills, technological change, management practices and changes in other inputs (such as capital).

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (14)

The quarterly reports' key findings include the rise in the number of hours worked (1.1%) outpaced growth in output (0.2%) in the three months to June.

The increased hours worked reflected a 0.8% rise in the number of employed persons and a 0.3% increase in average work hours.

Oil prices on the skids, will petrol prices follow?

By Stephen Letts

As we mentioned earlier, the global oil price fell 4% last week as the Saudis flipped the script from restricting supply to maintain the price at $US100 a barrel, to "we want a larger slice of the market, and we're increasing production."

That seems to have trumped the somewhat larger narrative of an all-out war in the Middle East.

The equation is complicated.

Iran, with 3% of global oil supply, is likely to be central to any escalation of hostilities in the Middle East. Libya, with 1% of oil supplies, is set to resume production, while global economic growth and oil demand is cooling at a time the Saudis want to sell more.

AMP's chief economist Shane Oliver says putting all-out war to one side, the result may be positive for Australia.

"Oil prices have been trending below $US70 a barrel," Dr Oliver said.

"If sustained this is positive for growth and inflation.

"And it means that petrol prices in Australia may continue to trend down (abstracting from the weekly/monthly cycles in each city – which has just turned up again in Sydney)."

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (15)

"There is a close relationship between the Asian Tapis oil price in Australian dollars and average petrol prices – and both are trending down," Dr Oliver noted.

ASX 200 up 0.7%

By Stephen Letts

Just a quick update, a spurt of buying in the past half hour has pushed the ASX 200 a bit higher.

At 11:15 AEST the index was up 0.7% to 8,272 points.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (16)

AGMs this week — ASA keeps its powder dry for now

By Stephen Letts

There are a couple of AGMs this week, but none seem to have drawn the ire of the Australian Shareholders' Association, defenders of retail investors in general, and "mums and dads" in the market in particular.

The Lottery Corporation (Tuesday) has been waved through by the ASA with a reminder it would prefer a hybrid meeting rather than the current planned physical AGM with a webcast.

Australian Foundation Investment Company's AGM (Thursday) also gets the tick of approval for all its AGM resolutions.

However, the ASA has updated its intentions for Treasury Wine Estates AGM (October 10), saying it will be voting against the re-election of chair John Mullins, arguing, as chair of Brambles and Qantas, his cup is already overflowing, although the ASA will vote against an overall board spill.

Key Event

ASX 200 hits new record, up 0.5% on opening led by miners

By Stephen Letts

The ASX is off to a rollicking start, opening up 0.5% to a new record high of 8,249 points.

The sentiment has been boosted by China's announcement of a new stimulus package on Friday, putting a tailwind behind the miners and energy stocks.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (17)

Fortescue (+3.5%), BHP (+1.7%) and Rio Tinto (+1.5%) have made strong starts to the day.

Smaller players Mineral Resources (+3.2%) and the mineral sands outfit Iluka (+2.9%) have also benefited, as have LNG producers Woodside (+2.8%) and Santos (+1.5%).

The big banks have all made gains led by CBA (+0.6%).

The supermarket chains are mixed - Coles (+0.2%) and Woolworths (-0.1%).

The biggest gainer of the day so far is Friday's biggest loser, Star Entertainment, up 12% or 3 cents - the classic dead cat bounce after Friday's more than 40% fall.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (18)

Gold is one of the few sectors struggling with Westgold (-3.1%), Newmont (-2.8%) and Ramelius (-2.4%) among the weakest performers on the ASX 200.

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (19)

Market snapshot

By Stephen Letts

  • ASX 200: +0.5% to 8,249 points (live values below)
  • Australian dollar: +0.1% 69.02 US cents
  • S&P 500 (Friday): -0.1% to 5,738 points
  • Nasdaq (Friday): -0.5% to 20,009 points
  • FTSE (Friday): +0.4% at 8,321 points
  • EuroStoxx (Friday): +0.7% to 523 points
  • Spot gold: -0.5% to $US2,658/ounce
  • Brent crude: -2.4% at $US71.90/barrel
  • Iron ore (Friday): +3.6% to $US102.10/tonne
  • Bitcoin: -0.2% to $US65,707

Prices current at around 10:30am AEST

Live updates on major ASX indices:

ASX climbed 0.7pc to a new record high as Chinese stimulus fires up mining and energy stocks — as it happened (2024)
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