The ASX is down again today.
At time of writing the S&P/ASX200 had dropped 48.70 points or 0.66% to 7,381.70 – a seven day low.
The loss, in part, is due to the RBA declining to buy bonds at its 11:15am announcement time, sending bond yields higher.
This caused the target April 2024 bond yield to surge from circa 0.42% to 0.68%, as the market continued to anticipate that the RBA would end its 0.1% target next week.
The 10-year yield was up 7bps at 1.9225% after hitting an 8-month high of 1.928%. The index has lost 0.46% for the last five days, but sits 3.29% below its 52-week high.
Bottom-performing stocks in this index are Pointsbet Holdings Ltd down 8.57% and Unibail-Rodamco Westfield down 5.25%.
Also driving the market down were real estate stocks, which were among the worst performers with Mirvac down 2%.
Macquarie's capital raise caused the major banks to dive 0.9%-1.4%.
Stocks that performed well were Reece up 6.7% after on positive guidance and ResMed up 5.7% on a strong result.
Is there still a place for coal?
We have written a lot about net-zero this week, but today we’ve asked for a different perspective from Wealth Within founder and analyst Dale Gillham and all has to do with coal’s place in the transition.
“This week, a lot has been said about Australia adopting a target of net-zero emissions by 2050 with part of the discussion centred on coal-fired power stations. The challenge Australia and the world has is whether renewable energy sources can meet the full requirement to achieve net-zero emissions.
“Regardless of what you think about coal as a resource, it has certainly performed very well in the last year with pricing rising from around US$60 a tonne to over US$200 a tonne although it has eased off slightly in the last month. That said, I believe this pullback is only temporary, as stockpiles around the world are low and given that winter is not too far away for Europe, the US and China, demand will increase.
“It may surprise some that Japan is our largest customer of coal while China comes in second; although China is now getting its coal from Russia rather than Australia, which is likely to continue. Other Asian countries like India, Korea and Taiwan among others buy coal from Australia, so any decrease in exports to China may be offset.
“Australian companies are well placed to benefit from the increased demand for coal with Whitehaven Coal up earlier this month by almost 300% since September 2020. New Hope Coal and Yancoal Australia have also benefited as both were up over 100% since September 2020 prior to the recent dip in price.
“That said, all three stocks have pulled back at present, which is exciting news for investors, as I believe they will all do well into the first half of 2022. Given this, I recommend investors sit back and wait for a month or so and then look at these stocks with a view to entering once price stops falling.”
Seems there is still a place for coal.
On the small cap front
Anson Resources Ltd (ASX:ASN) is up 10.87%. ASN has staked an additional 66 mineral claims at its Yellow Cat Project in the Thompson District, Grand County, Utah.
South Harz Potash Ltd (ASX:SHP) is up 8.82%. SHP will soon turn the soil on its flagship Ohmgebirge Potash Project in Germany after securing a key drilling permit.
Red River Resources Limited (ASX:RVR) is up 2.33%, following 'speculative buy' rating with a share target price of A$0.40 by Canaccord Genuity after a quarter of solid production and financial gains.