Big miners shine as ASX edges higher

Energy led the downturn on Monday as Lithium miner Pilbara Minerals share price fell by 5.41 per cent and Meridian Energy shed 2.61 per cent, respectively.

The lowdown:

It was a flat start for the ASX this Monday, but there’s still a big week ahead says market analyst Jessica Amir from Saxo Markets.

“There’s a lot on the line because we’re waiting for the Federal Reserve’s preferred gauge of inflation to be released and also the Feds meeting minutes from the last meeting,” said Amir.

“You’re seeing a bit of portfolio positioning first, but locally back home, you’re seeing the iron ore price move up and that’s supporting BHP and Rio Tinto, who report later this week,” said Amir.

The big miners will be reporting later this week and then will be followed by lithium companies, which will excite traders, said Amir.

“We are expecting a pretty robust week and some potential really solid reports that clients can sink their teeth into,” she said.

Energy companies were the best performers last year and Amir says that she expects this to continue as the demand for fossil fuels remains supported.

“Companies particularly in fossil fuels are remaining supported and that is because you’ve heard from the Australia’s energy regulator saying we don’t have enough oil or liquefied natural gas to last Australia for the year ahead. We don’t have enough coal or oil. So that underpins price strength for the year ahead,” she said.

In the US, the S&P closed a rocky week on Friday with a 0.3 per cent loss, the Dow Jones added 0.4 per cent while the Nasdaq composite fell 0.6 per cent.

Wall Street stocks have hit turbulence in February after shooting higher in January with hopes that cooling inflation could get the US Federal Reserve to take it easier on interest rates and that the economy could avoid a severe recession. Reports recently have shown more strength than expected in everything from the job market to retail sales to inflation itself, raising worries that the Fed will have to get tougher on interest rates.

That’s forced a sharp recalibration on Wall Street as investors move their forecasts for rates closer to the “higher for longer” stance that the Federal Reserve has long been espousing. The hope is that high rates can drive down inflation, but they also hurt investment prices and risk causing a severe recession.

Economists at Goldman Sachs added one more rise by the Fed in June to their forecast, meaning they see its key short-term rate ultimately rising to a range of 5.25 per cent to 5.5 per cent. That rate was at close to zero a year ago, and it hasn’t topped 5.25 per cent since the dotcom bubble was deflating in 2001. It’s currently at a range of 4.5 per cent to 4.75 per cent.

Quote of the day:

“The return of net migration to Australia should see fuel volumes continue to improve,” said UBS analyst Joseph Wong on Ampol’s result.

Tweet of the day:

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