The ASX was down in morning trading.
The S&P/ASX200 had dropped 40.00 points or 0.54% to 7,430.10 at time of writing after setting a new 20-day high.
Over the last five days, the index is virtually unchanged, but is currently 2.66% below its 52-week high.
The bottom performing stock in this index is Mesoblast Limited, which has suffered a reversal of fortune from yesterday to be down 4.74%. Mesoblast was up 11.8% at the end of trade yesterday, so this is just a minor slip.
Nearmap Ltd (ASX:NEA) is down 4.01%.
Overall, it has been a quiet day on the market so far.
The Materials sector has led the falls with BHP down 2%.
Inflation surges
The Reserve Bank of Australia (RBA) released a statement today reflecting on cash rate movement.
“As the risks to the inflation forecast had shifted higher, it had become possible that an earlier increase in the cash rate would be appropriate," the RBA stated.
This "shift in the distribution of possible outcomes was being reflected in other term interest rates in Australia".
The bottom line is we could see interest rates move higher before April 2024.
During the RBA’s November monetary policy meeting three possible options for its abandoned yield curve control policy were discussed.
They were “to continue with the target of 10 basis points for the April 2024 bond; to adjust the target by raising the target yield or shortening its tenor, say, to a bond maturing in 2023; or to discontinue the yield target altogether”.
The 2024 target was abandoned given “faster-than-expected progress towards the Bank’s goals and the revised outlook for inflation”.
The minutes also provided detail on the likely continuation of its emergency bond-buying program at $4 billion a week beyond February 2022.
“The Board’s review of the program in February 2022 will be based on the same three considerations as the previous reviews – namely, the actions of other central banks, how the domestic bond market is functioning, and the actual and expected progress towards the Bank’s goals for inflation and unemployment,” the minutes said.
Price inflation surging globally was also a topic.
“Members noted that headline measures of inflation had increased in a number of economies to well above central banks’ inflation targets. Higher energy prices, alongside the strong recovery in global demand and ongoing capacity constraints in the goods sector, had contributed to this development,” the bank said.
“Underlying inflation had also picked up, although not to the same extent as headline measures. Central banks and other forecasters generally expected most of the factors that had boosted inflation in prior months to be temporary and for inflation to moderate over the year ahead.
“Members noted that, while a range of outcomes for global inflation in 2022 were possible, risks to inflation forecasts were tilted to the upside.”
Westpac lifts fixed rates … again
The RBA may not yet lift the cash rate, but that hasn’t stopped the banks raising fixed interest rates.
Westpac has moved on its fixed rates for the third time in a month affecting owner-occupier and investor rates across the Westpac Group including St George, Bank of Melbourne and BankSA.
The Commonwealth Bank, ANZ and Westpac have hiked the cost of mortgages, with none showing advertised fixed home loan rates under 2%.
NAB is yet to move out of the 1 bracket on some of its products.
On October 19, Westpac increased its two- to five-year rates by 0.10% and increased rates again on November 4, lifting its three- to five-year rates by between 0.10% to 0.21%.
“At first, the fixed rate hikes were isolated to longer-term rates, but now banks are lifting across the board at an extraordinary pace," RateCity.com.au research director Sally Tindall said.
“These fixed rate hikes are more than speculation the cash rate could rise earlier than expected. The cost of wholesale funding is increasing, and the banks have decided it’s not sustainable to keep fixed rates at ultra-low levels."
Bottom line as always: shop around.
On the small cap front
Kingwest Resources Ltd (ASX:KWR) is up 13.79% after initial results revealed broad mineralisation at Sir Laurence discovery within the Goongarrie Gold Project, reinforcing the company’s interpretation that the discovery has potential to be a large mineralised system.
White Rock Minerals Ltd (ASX:WRM, OTCQX:WRMCF) is up 7.14%. WRM has made it much simpler for US investors to trade the company’s shares on the OTCQX by securing Depository Trust Company (DTC) approval.
Kinetiko Energy Ltd (ASX:KKO) is up 5%. KKO spudded the second of three wells at the Korhaan Project, a gas asset within its flagship Amersfoot property in South Africa’s prolific Permian Age Coal Fields.
Tietto Minerals Ltd (ASX:TIE) has gained 4.44% today. TIE secured debt funding of up to US$140 million to build West Africa's next gold mine at the Abujar Project in Côte d’Ivoire.
Imugene Limited (ASX:IMU, OTC:IUGNF) is up 4.35% having advanced another treatment in its development pipeline through a clinical trial supply agreement with Merck KGaA, Darmstadt, Germany, and Pfizer.