Goldman Sachs predicts a continued decline in iron ore prices this year due to a looming surplus in the physical market and increasing worries about China reducing its steel output, with the current 11.6% drop in iron ore futures from their recent high of US$114.95 to US$101.65 per tonne expected to worsen by a further 12%, meeting the criteria for a bear market, following a brief commodity price rally sparked by China's commitment to its property sector that has now waned due to inadequate stimulus and escalating concerns over Chinese steel production cuts.
At the closing bell, the S&P/ASX 200 was 0.03 per cent higher at 7,311.10.
Futures
The Dow Jones futures are pointing to a fall of 88 points.
The S&P 500 futures are pointing to a fall of 14 points.
The Nasdaq futures are pointing to a fall of 70.75 points.
The SPI futures are up 3 points.
Best and worst performers
The best-performing sector was Health Care, up 0.59 per cent. The worst-performing sector was Consumer Staples, down 0.3 per cent.
The best-performing large cap was James Hardie Industries (ASX:JHX), closing 14.38 per cent higher at $46.62. It was followed by shares in Reece (ASX:REH) and REA Group (ASX:REA).
The worst-performing large cap was IGO (ASX:IGO), closing 3.42 per cent lower at $13.29. It was followed by shares in Allkem (ASX:AKE) and Northern Star Resources (ASX:NST).
Asian markets
Japan's Nikkei has gained 0.31 per cent.
Hong Kong's Hang Seng has lost 1.78 per cent.
China's Shanghai Composite has gained 0.61 per cent.
Company news
Empire Energy (ASX:EEG) and APA Group (ASX:APA) have agreed to develop midstream gas infrastructure in the Beetaloo Basin. APA will invest up to $5 million for pre-engineering studies to support gas transportation to the Northern Territory and East Coast markets, subject to approvals. In response, Empire’s MD Alex Underwood commented, “APA potentially funding the midstream gas infrastructure facilities for Empire’s Carpentaria Pilot Project, reduces the capital requirement to Empire, enhancing project economics.” Shares closed 3.3% lower at 14.5 cents.
James Hardie Industries (ASX:JHX; NYSE:JHX) announced the results for its first quarter ending 30 June 2023. The company recorded a 13 per cent increase in Net Income and a 14 per cent increase in EPS compared to first quarter fiscal year 2023. In response, CEO Aaron Erter said, “we have a superior value proposition with the right products and solutions that help our customers grow profitably.“ Shares closed 14.2 per cent higher at $46.53.
Ensurance (ASX:ENA) announced that they have entered into a binding agreement with PSC Insurance Group (ASX:PSI) under which PSC acquire all of the shares in the capital of ENA by way of a Scheme of Arrangement. In response ENA’s Chairman commented, “This transaction delivers a healthy premium to the current market price of ENA shares, and the scrip consideration will allow ENA shareholders to retain exposure to the continued growth and development of the business. Shares closed 32.5 per cent higher at 26.5 cents.
Commodities and the dollar
Gold is trading at US$1,968.10 an ounce.
Iron ore is 0.9 per cent lower at US$104.10 a tonne.
Iron ore futures are pointing to a 0.34 per cent rise.
Light crude is trading $0.11 lower at US$81.83 a barrel.
One Australian dollar is buying 65.29 US cents.
