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ASX up 1.08% at noon as inflation figures fall

In May, inflation in Australia dropped to 5.6%, compared to 6.8% in the previous month. This decrease has raised hopes that the Reserve Bank can halt its series of interest rate hikes. Economists had expected a slowdown in annual price growth to around 6% due to lower fuel and travel expenses.

The Australian Bureau of Statistics released these latest figures, which precede the upcoming Reserve Bank board meeting next Tuesday. During the meeting, policymakers will assess the impact of increased borrowing costs on households, balancing it against the risk of prolonged high inflation.

Previously, financial markets had estimated a 20% chance of the interest rate moving to 4.35%. However, following this morning’s data, that probability is likely to be reduced further.
Jim Chalmers announced on Wednesday that the projected surplus for this financial year would be “significantly” higher than the anticipated $4.2 billion. This is attributed to robust employment growth and sustained high commodity prices.

At noon, the S&P/ASX 200 is 1.08 per cent higher at 7,195.20.

The SPI futures are pointing to a rise of 81 points.

Best and worst performers

The best-performing sector is Consumer Discretionary, up 1.74 per cent. The worst-performing sector is Utilities, down 0.03 per cent.

The best-performing large cap is Ramsay Health Care (ASX:RHC), trading 5.12 per cent higher at $57.50. It is followed by shares in Meridian Energy (ASX:MEZ) and IDP Education (ASX:IEL).

The worst-performing large cap is Evolution Mining (ASX:EVN), trading 1.65 per cent lower at $3.275. It is followed by shares in Liontown Resources (ASX:LTR) and Northern Star Resources (ASX:NST).

Asian markets

Asia-Pacific markets were mixed as the region digests May inflation figures out of Australia and China releases its industrial profits for May.

In Japan, the Nikkei 225 rebounded after three straight days of losses, gaining 0.68%, with the Topix also surging 0.88%.

In contrast, South Korea’s Kospi lost 0.4%, while the Kosdaq was down 0.12%.

Hong Kong’s Hang Seng index also reversed its gains after climbing almost 2% on Tuesday, falling 0.39%. Mainland Chinese markets were also in negative territory as China’s industrial profits sank 18.8% in first five months of 2023.

The Shanghai Composite was down 0.31%, while the Shenzhen Component saw a larger loss of 0.82%.

Company news

Raiden Resources (ASX:RDN) has entered into a transaction to acquire an 80 per cent interest in the Welcome Exploration tenements. These are located in the Pilbara region of WA. Dusko Ljubojevic, MD of Raiden, commented: “With credit to Raiden’s management team, the company has managed to secure prospective ground immediately adjacent to one of the most exciting lithium discoveries this year.” Shares are trading 28.57 per cent higher at 0.9 cents.

Encounter Resources (ASX:ENR) has identified carbonatites over 3.5km of strike in the West Arunta region of WA. MD Will Robinson said: “Both holes contain zones of shallow oxidised and fresh carbonatite that returned anomalous niobium-REE on a handheld pXRF.” Shares are trading 28.3 per cent higher at 34 cents.

Stellar Resources (ASX:SRZ) has intersected massive sulphides of zinc, lead and copper at the company’s North Scamander project in Tasmania. Executive Director, Gary Fietz, commented: “The significant Zn-Pb-Cu mineralised zone intersected to date… is very encouraging as this is interpreted as being the top of a metal-rich hydrothermal system which may exist at depth”. Shares are trading 40 per cent higher at 1.4 cents.

Commodities and the dollar

Gold is trading at US$1782.70 an ounce.
Iron ore is 4.1 per cent higher at US$113.9 a tonne.
Iron ore futures are pointing to a 1.04 per cent rise.
One Australian dollar is buying 66.35 US cents.