The ASX jumped out of the blocks this morning led by the materials and technology sectors.
The S&P/ASX200 has so far gained 60.60 points or 0.82% to 7,450.70, despite crossing below its 125-day moving average. The index has lost 1.52% for the last five days, but sits 2.39% below its 52-week high.
Top-performing stocks in this index currently are Nickel Mines Ltd up 6.53% and TPG Telecom Ltd (ASX:TPM) up 5.98%.
Other stocks to watch have included Liontown Resources (ASX:LTR) Ltd which surged 7.1% to $1.66 after signing a binding offtake agreement with South Korean-based LG Energy Solutions for the development of its $473 million Kathleen Valley Lithium Project in WA.
The agreement starts with the supply of 100,000 DMT (plus or minus 10%) in the first year, increasing to 150,000 DMT in years 2-5 and is based on market prices.
- Afterpay was 5.1% higher to $77.28 after the Bank of Spain approved Block’s takeover.
- Rival Zip Co was 4.1% better off to $4.08.
- Mesoblast rose 4.9% to $1.38 and Pilbara Minerals gained 3.1%.
- Fortescue Metals dropped 0.7% to $20.96 after it was downgraded to “Sell”by Citi.
Retail sales highlight improving outlook
The retail sales report for November was released by the Australian Bureau of Statistics yesterday and showed a strong gain of 7.3% to a new record of $33.4 billion. Amongst the drivers of the gain were clothing, footwear and personal accessories which rose 38.2%.
Yesterday’s report follows consecutive rises of 4.9% in October 2021 and 1.3% in September 2021 after a 1.7% fall in August 2021, pointing to a measured economic recovery.
According to Ben James, director of Quarterly Economy Wide Statistics, retail sales are now at their highest level ever recorded, up 5.8% on the previous record set in November 2020.
“Further easing of COVID-19 restrictions in the South-Eastern states and territories has seen the retail industry recover all lost momentum caused by the Delta outbreak,” James said. “Victoria recorded the largest state rise, up 20.0%, reaching its highest level of the series. This follows the state’s lockdown ending in late October.”
“Continued easing of COVID-19 restrictions, including less strict density and capacity limits, in New South Wales (5.1%) and the Australian Capital Territory (19.2%) led to rises in turnover to record levels.”
While the Northern Territory was the odd one out, all remaining jurisdictions recorded retail sales rises to record levels. Turnover in the Northern Territory fell 2.7% as lockdown restrictions introduced throughout the month negatively impacted sales.
Discretionary spending was strong in November, with five retail industries seeing rises for the second consecutive month.
Food retailing was the only industry to fall, down 2.5%, continuing the post-lockdown pattern where food retailing, including supermarkets, liquor etc. falls, while cafes, restaurants and takeaways rise (9.3%) as households venture out again.
Offset accounts get a boost
Holders of mortgages are pouring money into their offset accounts.
The Australian Prudential Regulation Authority has reported that around $50 billion has been deposited to offset accounts, yet another record and showing mortgage holders are generally sensible and can see the potential for tighter monetary conditions ahead.
It looks like Australians are approximately 45 months ahead of principal and interest payments.
Minister for Housing and Assistant Treasurer Michael Sukkar said these figures show that Australians are well placed to pay down and get ahead on their home loans as the Australian economy is recovers from the COVID-19 pandemic.
"On top of strong jobs growth and unemployment at 4.6%, household savings throughout the pandemic are ensuring people can get ahead and stay ahead of their mortgage," Minister Sukkar told Savings.com.au.
"Housing programs, from HomeBuilder to the Home Guarantee Schemes, have seen more Australians achieve the goal of owning their own home.
"The economic support provided to households during the pandemic has backed in Australian homeowners and we remain committed to supporting more people buying a home of their own."
No chicken tonight ... or tomorrow night
KFC has downgraded its chicken outlook.
The fast-food giant has had to reduce its menu as chicken shortages take hold.
Highlighting this issue and the broader issue of general product shortage is Inghams.
Inghams has warned that chicken supplies are at risk as the spread of Omicron greatly affects supply chains.
“Many Inghams employees (are) being forced to isolate at home due to contracting COVID in the community or as a result of being close contacts,” Ingham's chief executive Andrew Reeves said.
“The operational and trading difficulties have resulted in significant operational inefficiency, additional costs and the temporary suspension of a number of Ingham’s products. Inghams is working closely with our customers and we are focused on supplying as much product as possible to customers while the current disruption continues.”
Along with Steggles and Golden Farms, Inghams is a key KFC supplier.
Inghams shares fell 6% to $3.32 on Tuesday.
“The company continues to manage the cumulative impacts associated with COVID issues which have arisen through FY22,” Reeves said.
“We will continue to closely manage our working capital and inventory and seek to implement initiatives to minimise the financial and other impacts of COVID through the second half (of the financial year).
“We are currently maintaining our Australian processing operations while seeking to ensure the safety and engagement of our employees, many of who are demonstrating outstanding levels of commitment to work through the current challenges,” he said.
As for KFC.
“KFC is currently experiencing intermittent supply chain disruptions nationally due to COVID-19 related absenteeism at our chicken suppliers, meaning some of our restaurants are unable to offer our full menu, which relies on fresh chicken,” a KFC spokesman said.
On the small cap front
ClearVue Technologies Ltd (ASX:CPV, OTCQB:CVUEF) is 19.64% higher. CPV said its completed archetype model building demonstrated how its product could achieve a net-zero or near-zero energy-use building.
PVW Resources NL (ASX:PVW) is up 8.49% following further success during a follow-up field program at the Tanami rare earth element (REE) and gold camp in Western Australia.
CuFe Ltd (ASX:CUF) has gained 5% this morning after noting it has made strong operational progress via its subsidiary Wiluna Fe Pty Ltd at the JWD Iron Ore Project in Western Australia.
Global Energy Ventures Ltd (ASX:GEV) has gained 4.76%. GEV has hit the ground running in the new year with the 2022 development program underway for its 2.8 GW green hydrogen export project on the Tiwi Islands, Northern Territory, Australia.
Zelira Therapeutics Ltd (ASX:ZLD, OTCQB:ZLDAF) is 3.12% higher. ZLD has received a cash refund of A$1.292 million under the Australian Federal Government’s Research and Development Tax Incentive Scheme.
Lithium Power International Ltd (ASX:LPI) is 0.86% better off at time of writing. LPI has begun the process of divesting its Western Australian Greenbushes and Pilgangoora hard rock lithium assets into a subsidiary over the next six months, which will then seek to list on the ASX.