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ASX closes 0.8% higher as M&A in resources picks up

PUBLISHED

2023-12-19

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Australian shares posted solid gains driven by increased merger and acquisition activity in the resources sector and a surge in oil prices due to concerns about supply disruptions in the Red Sea.

The S&P/ASX 200 rose by 0.8%, with all sectors showing positive performance on the expectation of rate cuts in 2024.

However, despite positive market sentiment, the Reserve Bank's December meeting minutes revealed a more cautious stance on inflation, leading to a reevaluation of rate cut expectations.

Futures

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

The S&P 500 futures are pointing to a rise of 0.75 points.

The Nasdaq futures are pointing to a fall of 11.5 points.

The SPI futures are up 61 points.

Best and worst performers

All sectors are in the black. The best-performing sector was Utilities, up 1.82 per cent. The sector with the fewest gains was Consumer Staples, up 0.53 per cent.

The best-performing large cap was QBE Insurance Group (ASX:QBE), closing 3.90 per cent higher at $14.66. It was followed by shares in Meridian Energy (ASX:MEZ) and IDP Education (ASX:IEL).

The worst-performing large cap was Pilbara Minerals (ASX:PLS), closing 3.02 per cent lower at $3.85. It was followed by shares in Qantas Airways (ASX:QAN) and Allkem (ASX:AKE).

Asian markets

Japan's Nikkei has gained 1.09 per cent.

Hong Kong's Hang Seng has lost 0.72 per cent.

China's Shanghai Composite has gained 0.62 per cent.

Company news

Lake Resources (ASX:LKE; OTC:LLKKF) announced its Phase One DFS for its Kachi lithium brine project in Argentina. The project boasts a post-tax NPV8 of US$2.3 billion and an internal rate of return of 21%. The project targets annual average EBITDA of US$635 million and EBITDA margin of 76%. Shares closed 3.85 per cent higher at 13.5 cents.

Lithium Universe (ASX:LU7) reports excellent progress of the Engineering Study by Hatch on the Company’s Québec Lithium Processing Hub multi-purpose battery-grade lithium carbonate refinery. The Refinery is rated at 16,000 tpa with an assumed feed grade of spodumene at or around 5.5% Li2O. Shares closed flat at 3.5 cents.

Culpeo Minerals (ASX:CPO, OTCQB:CPORF) reported significant widths of visible copper mineralisation have been intersected at very shallow depth at the El Quillay Prospect, Fortuna Project Chile. The samples are to be dispatched for laboratory analysis, with assay results expected in January 2024. Shares closed 13.33 per cent higher at 3.4 cents.

Sunstone Metals (ASX:STM) announce outstanding high-grade gold exploration results ~1km away from the Limon Central Shoot at its Bramaderos project in southern Ecuador. In response, Sunstone Managing Director Malcolm Norris, “such positive results early in an exploration program give you confidence that this will be large system with widespread gold and silver from surface.” Shares closed 15.38 per cent higher at 1.5 cents.

Commodities and the dollar

Gold is trading at US$2,037.30 an ounce.

Light crude is trading $0.02 lower at US$72.45 a barrel.

One Australian dollar is buying 67.23 US cents.

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