• The ASX extends its 1% gain last week by another 1% on Monday
  • Miners lead as commodity prices rally
  • US CPI ahead tonight


The ASX tracked last Friday’s rally on Wall Street’s and jumped 1% straight out of the gates this morning. The index managed to hang on to the gains, finishing Monday 1.12% higher.

All sectors except Healthcare were higher as investors await the US inflation data due later tonight.

The Health index was brought down by sector heavyweight CSL (ASX:CSL), which fell 0.8% on no particular news.

Miners were the clear winners as commodities rallied amid a recent softening in the USD.

The US dollar is at a 20-year high versus its major trading partners’ currencies.

Against the Euro, it’s trading at below parity and against the traditional safe haven of the Yen, it’s at the highest since 1998.

The strength of the US dollar has also pushed the the Chinese Yuan to a historic 7 level. While Chinese exporters should get a lift from a weaker currency, the country’s capacity to buy commodities in the spot market could be restricted.

After rising 11% on Friday, shares in Mineral Resources (ASX:MIN) rose another 3.5% today amid investors’ excitement that it would be spinning off and listing its lithium business.

While MIN has yet to confirm the move, an article published by the AFR said that JP Morgan has already been working on the plan and if executed, the standalone company would be the biggest lithium pureplay on the ASX.

Energy stocks also caught a bid on Monday amid reports that Russia is losing ground in Ukraine, which could trigger Putin to cut off more energy supplies to Europe.

Meanwhile, a couple of crucial data points await investors this week.  There’s the US CPI later tonight, and Australia’s unemployment rate due on Thursday.

July recorded the lowest unemployment rate in Australia since 1974, and all eyes are now on the August rate.

“Bad news will be good news for markets, as the RBA wants to see the labour market cool,” said Josh Gilbert, market analyst at eToro.

On the US CPI, Gilbert said that July’s CPI reading was encouraging as both core and headline inflation dropped with lower energy prices.

“Although expectations for a 75bps hike in September are around 87% heading into the reading, a lower CPI print could lower these expectations to a 50bps hike, providing some relief to the Australian market,” Gilbert said.



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Metal plays Nickel Industries (ASX:NIC), De Grey Mining (ASX:DEG) and Fortescue Metal (ASX:FMG) had a good day, up around 5-7% on the back of higher metal prices.



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Liontown Resources (ASX:LTR) slumped 3% after awarding Zenith Energy the contract for the supply of power to Kathleen Valley.

The project will be on a Build, Own and Operate (BOO) basis for what is currently expected to be the largest off-grid wind-solar battery storage hybrid power station for a mining project in Australia.