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Trader’s Diary: Everything you need to get ready for the week ahead
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- Last week: China, Inflation, GDP and energy prices
- ASX Emerging Companies (XEC) up 0.8%
- Interesting uranium and vanadium play to make an ASX debut this week
Major economic headlines last week
The headlines for the first week of June were all China and inflation and a bit of GDP. I totally nailed all that on Friday.
On some more fabulously volatile trade, local share markets moved ahead last week, the ASX200 ended 0.7% higher, the ASX Emerging Companies (XEC) up 0.8%.
There was however one gristly economic nugget worth dipping into the sickly sweet and sour sauce of life, to chew over for about two minutes.
WTF just happened to the price of electricity
Well, millions of years ago the lush temperate forests which adorned the eastern seaboard collected over the millennia in great steaming pools of dead forests and (long story, short) became coal, which drives about two-thirds of electricity generation here in Albostan.
I don’t know if he’s been told, but it’s quite a lot and he has been batting on about sorting this, especially considering how much of the stuff we send elsewhere. Anyway (focus, Christian) thanks to an alignment of factors, largely – war, the fickle friendship of Beijing and broken-arse coal fired generators – prices for coal are up somewhere in the vicinity of four or five times on this time last year.
This concoction of extraneous variables is creating all kinds of adventures but for our purposes we’ll stick to the kicker in demand it’s given gas… Which is a bit of a hassle because the prices for gas were already building before this business with Europe and the lovely-terrible pipelined Russian gas which big countries like Germany can’t really have anymore.
So the wholesale cost of electricity, like coal – is up four or five fold. But what coal needed a year to do, gas has done in the few months since late January – around ScoMo Day. That’s alarming. So the AER (Australian Energy Regulator) has said, right chaps, you can pass that on to the end user. And so as your bills for the last quarter come in, Stockhead recommends you keep a large glass of something mellow and soothing nearby.
Probably brandy – we’re hearing it’s the new gin. It’s certainly cheaper.
Last week a few Aussie economists reckon that prices this loopy keep getting loopier they could jack up the core price inflation (CPI) by as much as a full percentage point by the end of the year.
We probably should’ve been all over this. There’s been signs, I guess. My excuse is kids.
In any case, like children, there’s nothing useful one can really do about it now but take a deep breath, strap it to the shoulders and bear it like all the other enormous crosses one’s been lugging about for the last, oh I don’t know, 10 years sounds about right.
And unless they can fix these busted-ass generators or AGL hooks up the eastern seaboard directly into Mike Cannon-Brookes’ Twitter feed, it’s unlikely to sort itself until well after winter.
Now, I don’t like to give a free plug to a younger and better looking writer, so I’m going to recommend you read this for a more articulate and fact-based idea of what’s going on. Why? Because Bev has been quietly covering all of this for many, many years and to read him is to take a light walk through a rainforest of knowledge.
Also, when wholesale energy prices start rising exponentially and you get energy retailers actually telling customers to go join our competitors well, that’s something you’ll want to keep an eye on. And silly Christian aside, there is no one better at this energy market stuff than old, ugly Bevis.*
*Bev, you’re a dazzling, pubescent genius. You know I can’t help myself.
Economic calendar for this week
Australia
MONDAY
May Inflation gauge Monthly from Melbourne Institute
May Job advertisements read from ANZ
TUESDAY
(RBA) Reserve Bank of Australia Board meeting (CBA, WBC, ANZ AMP Capital expect rate hike of 25 basis points)
Purchasing managers index (May) Services gauge from AiGroup
WEDNESDAY
Labour account for March
THURSDAY
Weekly payroll jobs and wages
FRIDAY
New home sales for May
Business turnover for April
Skilled job vacancies (May)
Global
MONDAY
NZ Queen’s Birthday (Markets, Hobbiton closed)
China May Caixin Purchasing managers’ index
TUESDAY
US International trade (April)
US Consumer credit (April)
Japan April household spending
China May foreign reserves
WEDNESDAY
US MBA mortgage applications
EU ECB policy decision
THURSDAY
US Initial jobless claims
China International trade (May)
EU ECB policy decision
FRIDAY
US Consumer sentiment (June)
US May Consumer price index
China May inflation read
(Saturday June 11) China lending and money supply for May (useful, timely indicator on spending, investment, inflation)
Sources: Commsec, Westpac, Nabtrade
ASX IPO calendar for this week
These are the companies Josh and the ASX think might be listing:
Listing: June 7
IPO: $6m at $0.20
The company plans to explore and potentially develop its East Canyon project in Utah.
The project is prospective for both uranium and vanadium, two minerals anticipated to play a key role in the generation and storage of low-carbon energy.
Up to $1.5 million of the offer was made available to shareholders in Red Dirt Metals (ASX:RDT) which soared last year on a lithium discovery at its Mt Ida project in WA.
Red Dirt folded the East Canyon project into the float.
Listing: June 8
IPO: $5.5m at $0.20
This company has four projects across the NT, including the Allamber uranium and copper project, the Shoobridge uranium and gold project, the Woolgni gold project and the Mt Davis copper and gold project.
Kingsland also holds the Lake Johnston nickel and cobalt project in WA, 36km from the Emily Ann and Maggie Hays nickel deposits and Lake Johnston concentrator owned by Poseidon Nickel (ASX:POS).
Listing: 8 June
IPO: $19m at $0.50
The platinum group minerals (PGM) explorer and developer will acquire a 70% interest in private company Miracle Upon Miracle Investments on listing – which holds the Bengwenyama PGM project in South Africa.
That will make it one of a handful of pure play PGM companies on the ASX.
The project currently has a JORC 2012 Inferred Resource of 18.8 million oz (3 PGE + gold) and drilling is planned to kick off shortly after listing.
Bengwenyama is on the Eastern Limb of the Bushveld Complex, the largest source of platinum and palladium ore in the world.
South Africa is the only country that challenges Russia in its palladium output – a virtual supply duopoly that sees the countries combined produce around 80% of the world’s mined ounces.
The proportions of palladium and platinum at the project are relatively even at ~44% each, which CEO Johan Odendaal says gives the company optionality as conditions for palladium and platinum shift.
The metals are used largely in catalytic converters, devices in cars and bikes which moderate their emissions.
