Production will increase to the tune of nearly 650,000 barrels a day in July and August, up from a planned 400,000 b/d. Crude prices fell sharply after the news only to recover to end the day modestly higher. Traders may be saying the extra barrels won’t be enough to cool prices. OPEC has been unable to comply with its current quotas for months. The move comes as Europe largely banned imports of Russian oil. OPEC declined to prohibit Russia from contributing the extra supply to the market. The cannonball Brookes served the final blow to AGL’s demerger. AGL is down a CEO, a chairman and one demerger idea. The energy company retreated its contentious plan to divide its coal business on Monday morning after lobbying by Mike Cannon-Brookes succeeded in influencing major shareholders Martin Currie and Hesta to vote on the 15 June proposal. Four of the eight men on the board are no longer there either. Shares have edged down since the announcement, but trading remains on hold as investors await the next chapter of the saga. Goldman deflates the lithium boom. Lithium stocks listed on the ASX were hit hard on Wednesday following downbeat forecasts by Goldman Sachs. Analysts at the bank predict a “sharp correction” in prices over the next two years after supply was significantly expanded by firms that got cash injections from investors. They see prices coming as low as US$16,000 in 2023. Pilbara Minerals, Liontown Resources and Allkem all retreated by 16%, 4% and 15%, respectively, for the week.
Iron ore investors score a W
Iron ore staged a comeback this week as Chinese officials left the door open for more stimulus and set an end date for the lockdowns keeping tens of millions holed up at home. The manufacturing hub of Shanghai will reopen on 1 June, city officials say. The central government also pledged $167 billion in new infrastructure spending to stimulate a faltering economy. Iron ore was up 7% for the week. BHP, Fortescue Metals Group and Rio Tinto gained 7%, 10% and 2% respectively so far this week.
Valuations matter
It is time to return to fundamentals, says Andrew Clifford, chief executive at Platinum Asset Management. High quality balance sheets are key as inflation climbs and interest rates rise, Clifford said, meaning investors need to identify companies that can fund themselves and buy back shares. In remarks at the Investment Conference on Thursday, Jody Jonsson, equity portfolio manager at US$2.6 trillion Capital Group noted that “for the past 10 to 15 years you could pretty much ignore valuations as long as the fundamentals were coming together.”
“If you can’t get money so easily, if your stock isn’t so expensive, if you can’t get equity deals done, then you have to be self-funded,” she said.
Work from home no more
Elon Musk wants Tesla employees to return to the office. The tech founder known for sleeping on the floor under his desk told employees all week in a series of emails that they are required to spend “a minimum of 40 hours in the office per week.” For anyone wondering whether this is just the latest fad to be disregarded: “If you do not appear, we will take it that you have resigned.” Atlassian co-founder tweeted promoting the technology company’s “team anywhere” policy while providing Tesla employees a new home. “Musk responded in familiar fashion.
ASX winners and losers: AFTASMS Recap with AAP
The local share market has gained ground as Chinese economic hub Shanghai continues its reopening from two months of COVID-19 lockdowns.
The shale S&P/ASX200 index was 62.90 points, or 0.88 per cent, higher on Friday at 7,238.8. For the week the ASX200 lifted 0.78 per cent, its third consecutive week of gains.
The sector advanced on Friday, except for telecommunications, which was flat, and consumer discretionary shares, which inched lower.
Materials, the biggest sector gainer, rose 2.6%, with BHP up 2.5% to $46.76, Rio Tinto climbing 2.7% to $116.03, and Fortescue gaining 4.1% to $21.46.
“Sector performance illustrates this, if you step back and look at who's been the best and worst performers this week, it's mining and energy,” Saxo Australian market strategist Jessica Amir told AAP.
“And that’s strictly because the most populated, dense city, Shanghai, has reopened manufacturing. So great for all those companies involved in iron ore, copper, aluminium and coal.”
Within the energy space, Beach Energy and Whitehaven Coal both achieved 52-week highs as they gained 2.5% and 3.2%, respectively. Viva Energy, the owner of the Geelong refinery, added 2.8% to a record high.
Lithium miners Pilbara and Alkeem bounced back, up 7.5% and 3.8% respectively but down about 15% on the week on worries the battery metals boom is over.
