Is tech back?
It is, at least for today.
The ASX was led higher early today by the tech sector and communication stocks, however early gains made by the ASX were pared back in afternoon trade with the market finishing in the red.
Information Technology was up 1.98%, while Communication Services was 1.84% higher. Energy dragged 1.91%.
According to Citi, the tech renaissance needs further food for thought, with the analysts still factoring in a downgrade for the sector.
"While valuation looks much more reasonable, we see risks as skewed to the downside as we expect consensus downgrades due to a slowing demand environment," Citi's Siraj Ahmed said.
"That being said, margins in FY23 could surprise on the upside as companies look to reduce cash burn."
The upswing in tech follows lifts in the US due to a strong reporting season.
Second quarter earnings results from the likes of Apple, Amazon, Alphabet, Facebook and Microsoft have been generally positive, with RBC Capital Markets saying the results indicate headwinds from inflation but a strong outlook for cloud computing.
Annual cloud computing growth rates for Amazon, Microsoft and Google have exceeded 30% and reflect a “shift towards larger, long-term cloud contracts”.
According to RBC this should help local companies in the space.
“Both NextDC and Macquarie Telecom are currently developing new large multi-billion dollar data centre projects in Sydney with cloud hyperscalers as anchor tenants, and are expected to benefit from continued demand for cloud data services underpinned by hyperscaler, enterprise and government customers,” RBC analysts said in a morning note.
The S&P/ASX200 closed down just 1.00points to 6,974.90. Over the last five days, the index has gained 1.24%, but is down 6.31% for the last year to date.
The bottom performing stocks in this index were Orica Ltd down 9.65% and Graincorp Ltd down. 6.35%.
Two top-performing stocks in this index were Tyro Payments Ltd up 15.78% and Imugene Ltd (ASX:IMU, OTC:IUGNF), up 10.86%.
Making news today
Climate bill passed
The government has pushed its climate bill through the Lower House.
The bill sets in law Labor’s 43% emissions reduction target. The bill passed by 89 to 55 votes with the support of Greens MPs and the teal independents.
To get it through Prime Minister Anthony Albanese struck a deal with the Greens, making several minor amendments to the original legislation including a further assurance that the target was “a floor, not a ceiling”.
The Coalition stood against the bill with shadow minister Simon Birmingham saying, "Had the legislation been necessary to commit to higher level targets then I would have wanted to support it in a heartbeat.
"I would have expected we should back in behind it, but it wasn't necessary."
Not all coalition members were in agreeance with their party. Liberal MP Bridget Archer crossed the floor to vote with Labor and the independents.
Albanese called out the Opposition’s opposition.
"They have an opportunity when the legislation gets to the Senate to change their mind and to bring themselves into the 21st century and make themselves relevant to the debate," Albanese said.
"The impact of climate change is real. We need a response that is real."
The Coalition argued the bill was rolling back protections for rural and regional Australians.
Independent MP Zali Steggall called the progress exciting.
"This is an exciting day, we are locking into law net-zero by 2050," Stegall said.
"The climate wars are nearly over."
While crossbenchers said the bill didn’t go far enough, they voted it through to give businesses more certainty around clean energy investments.
Amendments raised by the teals included a push to enshrine greater transparency around reporting on emissions reductions and stronger protections for regional Australia in the net-zero transition.
Trade surplus record
Australia's trade surplus has hit a record high and in June on a surge in non-monetary gold, metal ores and minerals exports.
The Australian Bureau of Statistics (ABS) has released data that shows that the seasonally adjusted balance on goods and services surplus increased $2.7 billion to $17.7 billion in June.
This is well above consensus which, according to Bloomberg, had trade surplus falling in June to $14 billion.
Global volatility causing higher commodity prices has forced the trade surplus higher from its $7.38 billion record in February.
Goods and services credits (exports), driven by rises in non-monetary gold and metals ores and minerals, rose 5.1% to $61.53 billion, while goods and services debits (imports), driven by a rise in travel debits, rose 0.75% to $43.9 billion.
“Exports lifted 5.1% month over month, on the back of a 63.8% month over month leap in gold exports and a 27% month over month jump in metal exports. Imports were more stable at 0.7% month over month,” ANZ economists said.
“How much higher can the surplus climb? We think we’re near the peak. Australia’s golden run of trade windfalls has been underpinned by sales of coal, iron ore and LNG.
”But our biggest buyer, China, has been trying to limit its reliance on coal imports, and its steel output is expected to weaken this year.”
Here’s a look at some of the top small cap stories of the day.
Surefire Resources discovers new mineralised gold trend in RC drilling at Yidby
Surefire Resources NL (ASX:SRN)’s new gold trend exhibits large widths with typically higher-grade gold within a mineralised halo.
Emyria initiates pre-clinical studies for MDMA-inspired analogues
“Fibrotic diseases represent a major group of unmet medical needs and our early screening results indicate some analogues may have potent antifibrotic activity,” said Emyria Ltd (ASX:EMD) managing director Dr Michael Winlo.
American Rare Earths' assays up to 5,065 ppm total rare earth oxide provide upside potential at Halleck Creek
“The project continues to grow and these results demonstrate the potential of Halleck Creek to become one of the major, large scale, rare-earth mines in North America," American Rare Earths Ltd (ASX:ARR) MD and CEO Chris Gibbs said.
Blue Star Helium spuds maiden well at Serenity prospect
Blue Star Helium Ltd (ASX:BNL, OTC:BSNLF)’s well is planned to total depth in the gas-bearing Lyons reservoir, which will maximise production if drilling is successful.
Brookside Energy in “company-making” milestone with commercial production at third SWISH AOI well
Although Brookside Energy Ltd (ASX:BRK)’s Flames Well is still in the very early part of the flow-back and stimulation fluid recovery process, the rate of oil and rich gas production has already allowed it to begin commercial production and sales.
On your six
Despite its jitters, copper tends to be the best yardstick for the health of the economy, with the last four recessions preceded by copper entering a bear market.
A copper-led recovery? How the bellwether metal fared in the June quarter
Copper peaked in March but has since fallen prey to the generally bearish sentiment that saw base metals prices slide towards the end of the reporting quarter. Prices seem to be stabilising and there are hopes for a recovery.
The one for good luck
Challenging the pace of change in healthcare: Prescient Therapeutics
“The fact of the matter is there are people walking around now who shouldn’t be alive, but they are because of our trials, which is really rewarding. You don’t get that in investment banking," Prescient Therapeutics CEO Steven Yatomi-Clarke said.