The ASX200 looks to be creeping higher today, having rallied 0.85% over the week at time of writing. Real estate has taken the biggest hit the week, dropping 2.67% as a rising cash rate puts increasing pressure on the sector. More on that in a moment.
Utilities (1.82%), Energy (1.73%), Industrials (1.51%), Consumer Staples (1.31%) and Financials (0.94%) will finish the week higher, while Information Technology (-1.50%), Communication Services (-1.42%) and Materials (-0.83%) fell over the last five days.
The All Ords has also recovered some ground this week, climbing 1.14% compared to the Small Ordinaries’ 2.72% jump.
Onto commodity movements for the week:
The Brent Crude price climbed, but has since fallen back to US$109.38 a barrel, the same price we started the week with.
Gold fell to US$1,801.82 today, having been on a rocky trajectory since last Friday’s close at US$1822.61.
- Tin rose 8.9%
- Nickel gained 7.9%
- Copper rose 2.0%
- Iron ore rose 0.5%
- Zinc fell 3.6%
- Aluminium dropped 0.9%
House prices fall for second month in a row
Predictions of a fall in the residential real estate market are beginning to eventuate, the higher cash rate having a marked effect on mortgages the nation over.
CoreLogic, an independent property data and analytics firm, has recorded a dip in its national Home Value Index (HVI) for the second consecutive month this year, a good indication that the housing market’s rapid inflation has been arrested.
- Properties in Sydney were down 1.6% over the last month
- Melbourne fell 1.1%
- Hobart slipped 0.2%
- Regional Victoria dropped 0.1%
While prices have yet to drop in the other major cities, they have begun to flatten, with Brisbane growing just 0.1% and Perth up just 0.4% in June.
“Housing value growth has been easing since moving through a peak in March last year, when early drivers of the slowdown included rising fixed term mortgage rates, an expiry of fiscal support, a trend towards lower consumer sentiment, affordability challenges and tighter credit conditions,” CoreLogic research director Tim Lawless said.
“More recently, surging inflation and a rapidly rising cash rate have added further momentum to the downwards trend.
“Considering inflation is likely to remain stubbornly high for some time, and interest rates are expected to rise substantially in response, it’s likely the rate of decline in housing values will continue to gather steam and become more widespread.”
Russia’s withdrawal from Snake Island prompts hopes for renewed Ukrainian grain exports
In good news for the worsening global food crisis, Russia has withdrawn troops from the infamous Snake Island following intense shelling – the same island Ukrainian soldiers ordered to surrender while under fire from a Russian warship famously responded, “Russian warship, go f**k yourself!”
Russia painted the withdrawal as a “gesture of goodwill” that demonstrated Moscow’s willingness to allow grain exports to be shipped from Ukrainian ports in the Black Sea.
Ukraine disagrees with that sentiment, stating they drove Russian forces off the island with a massive artillery barrage and assault overnight.
The truth no doubt lies somewhere in-between.
Lifting the Black Sea blockade and allowing Ukrainian grain exports to flow has been one of the primary objectives of the West and its allies in this conflict.
"The most significant aspect is that this could open the door to Ukrainian grain exports from Odesa, which is critical for Ukraine's economy and for the global food supply," tweeted US-based Foreign Policy Research Institute senior fellow Rob Lee.
It’s likely a formal agreement will still be necessary to facilitate un-impeded grain exports from Ukrainian ports.
Sweden and Finland on the cusp of joining NATO
In the latest evolution of geopolitical tension in Europe, Sweden and Finland have officially been invited to join NATO, with NATO Secretary-General Jens Stoltenberg stating the organisation is "prepared for all eventualities" in reference to potential Russian aggression.
Putin, predictably, responded with threats.
"They should clearly understand that they didn't face any threats before this," he said.
"If NATO troops and infrastructure are deployed, we will be compelled to respond in kind and create the same threats for the territories from which threats towards us are created."
German Chancellor Olaf Scholz appeared unimpressed by Russia’s assertions that NATO was acting with "imperial ambitions".
"This is honestly quite ridiculous," Chancellor Scholz said, "Because, in fact, NATO is a defensive alliance.
"It does not attack other countries, neither does it intend to. It is not a threat to anyone in its own neighbourhood.
“In fact, it is Putin who has made imperialism the goal of his politics and the object of his politics."
Small cap wins for the week
It was a good time for biopharmaceutical companies this week, with OCC, IMU and RAC all making considerable gains.
Orthocell Ltd (ASX:OCC) shot up 37.5% over the week on securing an exclusive global licence and manufacturing deal for its core platform with BioHorizons
Imugene Ltd (ASX:IMU, OTC:IUGNF) gained 45% on Wednesday, having recorded positive safety and efficacy data from a Phase 2 trial targeting gastric cancer, before losing some of that ground to finish up 21.2% for the week.
Race Oncology Ltd (ASX:RAC) gained 25% over the last five days, having demonstrated its flagship platform Zantrene is capable of both tackling cancer and protecting the heart from damage caused by chemotherapy drugs, a ‘first of its kind’ dual therapy.