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ASX closes 0.05% higher as S&P Global downgrades banks

PUBLISHED

2023-08-22

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Global rating agencies' recent downgrades of the US banking sector have raised concerns. Moody's and Fitch initiated the trend, signalling potential issues. S&P Global, the third major agency, followed suit, downgrading and warning mid level banks due to funding risks and profitability challenges. These moves come amid bank failures and issues in mid level institutions. S&P's actions emphasise deposit worries, high interest rates, and vulnerabilities in commercial real estate exposure. Rising interest rates are impacting US banks' funding, while the Federal Reserve's tightening contributes to shrinking deposits and unrealized losses. The situation could worsen if high rates persist. S&P's downgrades are dampening Wall Street sentiment, focusing on rising bond yields, China's economic troubles, and ongoing inflation concerns. Notably, most banks maintain stable outlooks, but caution is warranted.

At the closing bell, the S&P/ASX 200 was 0.05 per cent higher at 7,118.90.

Futures

The Dow Jones futures are pointing to a fall of 8 points.

The S&P 500 futures are pointing to a fall of 0.25 points.

The Nasdaq futures are pointing to a rise of 1.75 points.

The SPI futures are up 10 points.

Best and worst performers

The best-performing sector was Information Technology, up 5.19 per cent. The worst-performing sector was Consumer Staples, down 2.52 per cent.

The best-performing large cap was Xero (ASX:XRO), closing 3.4 per cent higher at $118.88. It was followed by shares in Mercury NZ (ASX:MCY) and Telstra Group (ASX:TLS).

The worst-performing large cap was Coles Group (ASX:COL), closing 7.08 per cent lower at $16.01. It was followed by shares in Woolworths Group (ASX:WOW) and Ampol (ASX:ALD).

Asian markets

Japan's Nikkei has gained 0.92 per cent.

Hong Kong's Hang Seng has gained 0.66 per cent.

China's Shanghai Composite has gained 1.56 per cent.

Company news

Lake Resources (ASX:LKE; OTC:LLKKF) reports that deeper drilling at the Kachi lithium brine Project in Argentina indicates significantly larger horizontal and vertical extents of the lithium-bearing brine than previously understood. In response, Michael Gabora, Director of Geology and Hydrogeology of Lake Resources, commented, “the latest drilling intercept results indicate that this resource is much larger than initially anticipated as the known lithium brine extent continues to expand laterally and vertically,” Shares closed flat at 23.5 cents.

BBX Minerals (ASX:BBX) has announced that they have recovered precious metals from hole TED 020. In response, Andre J Douchane, CEO, commented, “We will continue to evaluate and fine tune several alternative methods to recover the precious metals from the bioleach solids.” Shares closed 8.11 per cent higher at 4 cents.

Nimy Resources (ASX:NIM) has secured a $2.5M cornerstone investment from Lind Global Fund to conduct nickel and lithium drill programs. Nimy Resources Executive Director Luke Hampson said, “the funds invested by Lind will further our ability to drill highly prospective targets and propel our project to the next level.” Shares closed 20 per cent higher at 15 cents.

Commodities and the dollar

Gold is trading at US$1,926.60 an ounce.

Iron ore is 0.9 per cent higher at US$110.35 a tonne.

Iron ore futures are pointing to a 3.89 per cent rise.

Light crude is trading $0.07 lower at US$80.65 a barrel.

One Australian dollar is buying 64.38 US cents. 

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