The S&P/ASX200 was down 0.3% today to 7,415.10. The fall came on the back of the material sector’s weak performance.
Over the last five days, the index has gained 0.72% and is currently 2.85% off its 52-week high.
The bottom performing stocks were Lynas Rare Earths Ltd down 7.39% and Champion Iron Ltd (ASX:CIA) down 5.02%.
Materials was down 1.9% at time of writing.
BHP Group Ltd and Rio Tinto Limited were also down, 3% and 3.5% respectively as iron ore continued to fall.
The iron price has tumbled 5% in 24 hours.
On the bright side, Qantas Airways (ASX:QAN) Limited is up 4.8% to a 52-week high of $5.96, which was expected after it announced it will reopen popular international flight routes.
Staying with the travel sector, Helloworld Travel Ltd released its quarterly this morning, reporting total transaction value had climbed 50.7% in the September quarter, with revenue up 62.7%.
The travel agent’s management noted there was sufficient cash to maintain operations beyond 2022 based on current liquidity levels and cash burn rates saying border reopening was “incredibly welcome news”.
Helloworld is up 1.08% at time of writing.
The tech sector is also up 0.7%, with WiseTech Global Ltd leading the way gaining 2.4%, before dropping back to be up by 1.38% at time of writing.
RBA could lower inflation target
RBA Governor Philip Lowe has delivered a speech on central bank independencies, mandates and policies, saying the current inflation target is “not set in stone”.
"The target and the accompanying language can be changed if both the central bank and the government agree," Lowe said.
Generally, the numerical target of 2 to 3% has been maintained and so too has the focus on the medium term.
BetaShares chief economist David Bassanese said that due to declining inflation globally since the 2-3% target was set, it would be appropriate for any government that wins next year’s Federal election to review the policy.
"Indeed, annual headline CPI inflation has not been consistent with the 2 to 3% target band over the past five years, though volatility associated with the COVID-19 pandemic has recently seen it hit 3.8% in the June quarter," Bassanese said.
"Accepted wisdom globally these days is to aim for an inflation rate of around 2%, not 2.5%," he said.
"A 1 to 3% target band – as evident in Canada and New Zealand – would still provide the RBA policy flexibility while aiming for an average inflation rate potentially more achievable over time and more in keeping with international norms."
And movement on targets could have ramifications for interest rates.
"Specifically, were the next Federal Government to agree with the RBA on a wider inflation target band with a lower mid-point – such as 1 to 3% – as I and increasingly others have recommended, it would provide scope for the RBA to lift interest rates somewhat earlier, helping, in turn, reducing the risk of asset price instability in the years ahead."
The RBA has said it won’t raise rates until 2024. However, analysts are predicting they could be lifted toward the end of 2022.
Keep watching the cannabis sector
As we do each week, we asked Wealth Within founder and analyst Dale Gillham what caught his eye.
This week, it’s cannabis.
“One of the secrets to investing is to find areas that are likely to grow consistently year on year. A lot of attention in the last few years has been on the technology sector, which has certainly delivered results. However, two areas that have not gained as much attention are alternative energy and cannabis, which I believe will grow substantially in the years to come.
“Earlier this year, cannabis stocks took a big step forward after the TGA finally approved the sale of low dose cannabidiol or CBD without a prescription. Currently, Americans spend around $13 billion on legal medical cannabis and forecasts indicate that by 2025 this figure will rise around 131% to $30 billion. So, how will this benefit Australia if the US produces its own cannabis products?
“Like the US, it is also forecasted that Asia will experience significant growth and the Australian climate is perfect for producing cannabis. Given our proximity to Asia, our stable currency, good track record with our Asian trading partners, a willing and stable workforce together with a good regulatory environment means Australia is well placed to meet the increasing demand for cannabis products. Given this, the question investors should be asking is whether it is time to be investing in cannabis stocks.
“There are three stocks (in no particular order) that I believe are worth looking at. The first is Incannex Healthcare (IHL) who develops medicinal cannabinoid pharmaceutical products and is well placed to benefit from increased demand, as it is capable of expansion and exporting globally.
“Next up is ECofibre (EOF), and while it is not into medical cannabis, it is in this developing sector and has grand plans of being the global leader in hemp technologies.
“Cann Group (CAN) is also worth looking at, as it is the first Australian company to be licensed to cultivate medicinal cannabis. Its vision is to be a leading supplier of cannabis and medicinal cannabis products.”
On the small cap front
Twenty Seven Co Ltd (ASX:TSC) is up 20% after it completed its latest soil sampling program at the Rover Gold Project in WA.
Gascoyne Resources Ltd (ASX:GCY) is up 2.56%. GCY received further shallow gold hits at Hendricks, within 1.5 kilometres of its low-cost Dalgaranga processing plant.
Nickelsearch Ltd is up 2.33% having wasted no time in getting on the ground at Carlingup Nickel Sulphide Project in Western Australia since listing on Monday with a maiden drilling program kicking off yesterday.
Elixinol Wellness Ltd (ASX:EXL, OTCQB:ELLXF) is up 1.02% and is still riding the wave of its announcement yesterday that its subsidiary Hemp Foods Australia has secured nationwide distribution with Australia’s largest supermarket chain Woolworths.