The Australian stock market is trading higher, despite current global and national concerns about inflation, rate hikes and energy prices.
At 10:30 a.m. AEST, the ASX 200 was up 0.2%, although Wall Street and European markets traded lower in recent sessions.
All Ords also rose, marginally, to 0.1 percent.
The best results were Nufarm (+ 3%), ALS Limited (+ 1.6%) and Dexus (1.6%).
Industrial products, consumer goods and financial stocks were all green.
However, energy supplier Origin had lost almost 9% in 30 minutes after the market opened.
That was after he revised down his earnings as the price of wholesale energy soared.
Coal, gas and oil prices have risen due to global volatility, including the Ukrainian war.
At the local level, coal prices are also rising, which raises the price of electricity generation.
Eraring on Macquarie Lake is the largest power station in Australia (Shuttershock: Harley Kingston)
Origin noted that its Eraring coal-fired power plant is producing less energy, which means the energy company has to buy more energy in the spot market.
“The recent undersupply of coal material to Eraring is leading to lower plant production, additional purchases of replacement coal at significantly higher prices and is being exacerbated by the limitations of rail coal delivery.
“In addition, the lower production of Eraring translates into greater exposure to the purchase of electricity at current high cash prices in order to meet customer demand.
“As a result, Origin now expects the underlying EBITDA of energy markets in fiscal year 2022 to be $ 310 million to $ 460 million, below the original target range of $ 450 million to $ 600 million.”
Concerns about rising energy prices were highlighted last week, when the energy regulator raised default prices due to similar concerns raised by Origin.
The Australian stock market is challenging global sentiment
The Australian stock market rose after opening, although global markets fell overnight.
The European DAX fell 1.3% after inflation data showed that prices had risen 8% in one year across the continent.
Like inflation here and in the United States, rising prices are driven by rising energy costs.
The price of gas and other energy has been rising due to the war in Ukraine and other global factors. The price of food is also going up.
Higher inflation increases the likelihood that central banks will raise rates to reduce uncontrolled prices.
“Inflation is back in line, with European inflation at its highest level of 8.1% year-on-year, helping rates lengthen yesterday’s sell-off,” NAB notes.
“Higher inflation and higher yields helped a cautious tone in equity markets, as US stocks were unable to continue the rebound last week.”
Overnight, Wall Street ended in the red, with the Dow and S&P falling 0.6 percent each, and the high-tech Nasdaq falling 0.4 percent.
Oil prices have risen (+ 0.6%) after the European Union agreed to ban most Russian imports, due to the country’s war in Ukraine. OPEC will meet this week to discuss its production.
Meanwhile, European natural gas reached its highest level in almost two months, according to ANZ.
This was after Russia cut off supply to more energy companies due to payment problems. It will only worsen inflation across the continent.
In Australia, the focus today will be on published GDP data.
ANZ forecasts a 0.8 percent increase, but says the focus will be on labor cost measures.
Meanwhile, current property data show that prices fell nationally for the first time since September 2020, down 0.3% overall, but some capital, such as Adelaide and Brisbane, continues to rise.
“We believe more falls are inevitable as interest rates rise,” ANZ adds.
The Australian dollar does not move to 72 US cents.
More to come.
Posted 3 hours ago Tuesday, May 31, 2022 at 10:01 PM, updated 36 minutes ago, 36 minutes ago, Wednesday, June 1, 2022 at 12:55 AM