Tech stocks rallied today and along with energy and utility stocks, led the ASX higher.
The S&P/ASX200 closed gained 60.00 points or 0.82% to 7,364.70 on the day, crossing above its 200-day moving average. Over the last five days, the index is virtually unchanged, but is down 1.07% for the last year to date.
Top-performing stocks in this index were Adbri Ltd up 7.42% and Imugene Ltd (ASX:IMU, OTC:IUGNF), which reversed its slide from earlier in the week to finish 7.35% higher.
On the downside, were Australia and New Zealand Banking Grp Ltd (-1.46 per cent), Harvey Norman Holdings Ltd (-1.4 per cent), ASX Ltd (ASX:ASX) (-1.06 per cent) and ARB Corporation (-1.2 per cent).
As for the sectors, it was Financials in the red down by 0.01%.
EV market risks rising with Beijing shutdown
With Beijing partially shut down due to an Omicron variant, downstream demand risks are growing.
We’ve already seen higher energy prices, rising rates and recession fears rear their ugly heads to affect supply chains and output, but mobility restrictions in Beijing are set to impact electric vehicle output, which will in turn impact raw battery material prices.
"These factors may have knock-on impacts for upstream battery raw material prices (for example, lithium) in the near-term," UBS analysts have stated.
"We still like the EV thematic (and its relevant commodities) term but are cautious on short-term air pockets."
UBS believes it is production and parts that will limit growth.
"We think that EVs are so heavily undersupplied with order backlogs stretching out to 1.5 years in some cases (VW has sold out of EVs until 2023) that production/parts will be the limiting factor."
Rio boss calls for accelerated shift to renewables
Rio Tinto Limited chief executive Jakob Stausholm wants to see Australia move more quickly towards a renewables future, particularly as the country moves away from coal-fired power plants.
Rio is one of Australia’s biggest energy users and currently relies on coal-fired generators to supply the majority of its electricity.
However, Stausholm believes Australia should accelerate the introduction of renewable power into its energy mix despite energy minister Angus Taylor’s proposed new rules to force power utilities to give five years notice of their intention to close power stations.
“It’s very clear – and it’s not just in Australia – we are just not developing renewable energy fast enough. That’s where we need to put our focus,” he said.
“The way we live is that we cannot just reduce our use of energy as Western societies. So, we need energy and if renewable energy goes slow, then, of course, you cannot phase out any fossil fuel.”
Rio is currently spending US$7.5 billion (A$10 billion) to slash its scope 1 and scope 2 emissions in half by 2030 and will spend billions to build renewable energy plants to power its Pilbara operations and other assets.
It intends to build wind and solar plants near its operations.
“I think what we have learned here over the last year is that if you are not focusing on the energy sources you have today, then you’re going to create problems. That’s also why my philosophy is always not pointing the finger at fossil fuels, but much more about focusing on what we can do to stimulate developing renewable energy.”