• Local shares rose on Friday, but ended the week over 1% lower
  • Blackrock outlined its case for a recession next year
  • The Fed will make its rates call next week

 

The ASX finished Friday 0.5% higher but for the week, the index was down 1.2%.

Miners gained today as investors turned bullish amid hopes that China could rise from Covid depths.

Chinese property stocks listed in Shanghai and Hong Kong led, pushing up iron ore futures prices in Singapore.

Investors are growing more optimistic that Chinese authorities will bring more stimulus packages to the ailing property sector at a key economic meeting next week.

China sensitive iron ore, copper and nickel stocks like Fortescue (ASX:FMG), Rio Tinto (ASX:RIO) and South32 (ASX:S32) rose around 2%-3%.

Lithium miners meanwhile came under pressure after Goldman Sachs forecast that lithium prices could struggle in the second half of 2023.

Goldman wrote in a note to investors:

“Our commodity team now expect lithium prices through 1H23 to reflect the near-term tightness and lagging spodumene contract price pass-through before declining over 2H23.

“While we see earnings support for the Australian stocks over 12-18 months on price lags, on a 12-month view we expect lithium stock prices to fall as lithium prices decline from record peaks.”

Meanwhile, Blackrock has joined a chorus of experts tipping a US recession in 2023.

“Recession is foretold as central banks race to try to tame inflation,” Blackrock analysts wrote in a report titled 2023 Global Outlook.

“It’s the opposite of past recessions. Central bankers won’t ride to the rescue when growth slows in this new regime, contrary to what investors have come to expect. Equity valuations don’t yet reflect the damage ahead.”

The report continued to paint a bleak picture.

“What worked in the past won’t work now. The old playbook of simply ‘buying the dip’ doesn’t apply in this regime of sharper trade-offs and greater macro volatility.

“We don’t see a return to conditions that will sustain a joint bull market in stocks and bonds of the kind we experienced in the prior decade.”

“We don’t think equities are fully priced for recession,” the report concluded.

In stock news today, Australia’s largest steel company Bluescope Steel (ASX:BSL) rose 0.3% despite a Federal Court judge finding that former executive Jason Ellis attempted to engage in cartel conduct and price-fixing in 2013 and 2014.

Looking ahead to next week, the all crucial Fed’s rate decision will be announced on December 14 (US time).

Another 50bp hike is already pencilled in by forecasters, which will cap the year off with seven straight increases worth 425 basis points.

BIG CAP WINNERS

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Casino operator Star Entertainment (ASX:SGR) was in a trading halt today pending a further announcement.

Star was earlier fined $100m by the Queensland regulators, but has been allowed to keep its Brisbane and Gold Coast operations open under a strict special supervision.

Beach Energy (ASX:BPT) rose 2.5% after saying that it does not intend to match the revised Hancock price of 28c per share to acquire Warrego Energy (ASX:WGO).

Beach had earlier upped the ante with a takeover offer of 25 cents, before Hancock counter-offered with 28c.

Warrego’s board has now unanimously recommended that shareholders accept the Hancock offer.

 

BIG CAP LOSERS

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Pinnacle Investment (ASX:PNI) fell 4% after predicting that its net share of performance fees from affiliates will be less than $1 million, compared to $6.4 million in the pcp.

Healius (ASX:HLS) was down slightly after announcing the stepping down of its CEO Dr Malcolm Parmenter, and the appointment of Maxine Jaquet, the current CFO and COO, to the role effective 1 March 2023.