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ASX down 0.51% at noon as commodity prices weigh on exports

The drop in commodity prices, such as LNG and coal, has led to a decline in Australia’s current account surplus for the three months ending in June. The Australian Bureau of Statistics reports that the surplus decreased by $4.8 billion to $7.7 billion in seasonally adjusted terms. This decline was primarily driven by a decrease of $8.0 billion in the balance of goods and services, resulting in a total balance of $31.4 billion. Additionally, Australia’s terms of trade decreased by 7.9%, marking the largest drop since the June quarter of 2009.

Grace Kim, the ABS head of international statistics, explained that the reduction in the current account surplus is due to lower prices for key export commodities, although this was partly offset by a decrease in the net primary income deficit. Notably, exports of goods experienced a significant 7.0% decline, the largest drop since the June quarter of 2014. This decrease was primarily attributed to falling prices for energy commodities like coal and LNG, which had previously reached higher levels in 2022.

However, the export of services saw a positive trend, increasing for the sixth consecutive quarter by 12.8%. This growth was driven by travel services, reflecting the ongoing recovery in education and personal travel following the reopening of Australia’s international borders. Additionally, it’s noteworthy that the number of international students in Australia surpassed pre-COVID-19 levels, marking the first instance of this since the pandemic’s onset.

At noon, the S&P/ASX 200 is 0.51 per cent lower at 7,281.30.

The SPI futures are pointing to a fall of 35 points.

Best and worst performers

The best-performing sector is Health Care, up 0.34 per cent. The worst-performing sector is Materials, down 1.24 per cent.

The best-performing large cap is Endeavour Group (ASX:EDV), trading 1.29 per cent higher at $5.49. It is followed by shares in IGO (ASX:IGO) and Auckland International Airport (ASX:AIA).

The worst-performing large cap is Yancoal Australia (ASX:YAL), trading 8.71 per cent lower at $5.03. It is followed by shares in Northern Star Resources (ASX:NST) and Evolution Mining (ASX:EVN).

Company news

Empire Energy (ASX:EEG) has announced increased flow rates at their C-3H Project. In response, Managing Director Alex Underwood commented, “The technical learning that is occurring is rapidly building our understanding of how to develop the Beetaloo’s Velkerri Shale. We believe that this will have positive implications for the productivity of future development wells.” 

INOVIQ (ASX:IIQ) and ResearchDx have signed an agreement to supply Inoviq’s EXO-NET exosome capture technology to enable provision of exosome isolation, biomarker discovery and diagnostics development services in the USA. In response, Dr Leearne Hinch, INOVIQ CEO, said, “this is an important, strategic move that enables us to provide high quality EXO-NET services to customers in the US, Australia and elsewhere, expanding our revenue generation opportunities for EXO-NET.” 

Southern Cross Gold (ASX:SXG) announces the best hole drilled to date on the project, a spectacularly wide and high grade intersection of gold-antimony mineralisation at the 100%-owned Sunday Creek Project in Victoria. In response, Managing Director, Michael Hudson, states, “One of our key strategies is to target high grades. When this is done in a good deposit, generally more drilling improves the discovery rate of high-grade material.” 

Commodities and the dollar

Gold is trading at US$1962.50 an ounce.

Iron ore is 0.3 per cent higher at US$118.50 a tonne.

Iron ore futures are pointing to a 0.23 per cent rise.

One Australian dollar is buying 64.59 US cents.

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